Cloud

Risk, Financial Modeling and Cloud Computing: A New Approach

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Executive Summary

Cloud Computing (CC) has been on the rise. Its pervasiveness has tremendous effects on both CC users and CC providers as well as on governments. The latter purports to regulate the industry to increase its security and users' confidence. Recent theoretical advances such as Shannon's channel and "Rational inattention" may explain the remarkable rise of this industry. But the switch from a CAPEX to an OPEX model that CC entails has significant impacts on firm valuation and wealth creation.

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