Author Question: Which of the following statements regarding real options is correct? (Read 91 times)

billyboy7272 · **on:** Aug 7, 2023

Which of the following statements regarding real options is correct?

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Real options involve both “real” and “financial” assets.

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An investment timing option is the ability to abandon a project if the cash flows turn out to be lower than expected. It reduces the risk of a project and increases its value.

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The abandonment option involves the possibility of delaying major expenditures until more information on likely outcomes is known.

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A flexibility option is the option to modify operations depending on how conditions develop during a project’s life, especially the type of output produced or the inputs used.

ealonif · **Reply #1 on:** Aug 7, 2023

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