alleryStart learning →A real option differs from a financial option because management
Acan shape project value
Bcan never exercise it
Ctrades on exchanges
Dmust hold to expiry
Answer & Solution
Correct answer: A. can shape project value
Managers run the project and so affect its value, unlike holders of a traded security.
Keep practising Capital Budgeting
Browse all Capital Budgeting questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
R&D managers can use real options valuation to handle uncertainty whenA benefit of NPV for a firm with several projects is that NPVs areNPV accuracy relies heavily on the chosenSensitivity analysis studies how uncertainty in a model's output relates to itsAdjusted present value equals equity-financed NPV plus theA Rs 50,000 cash flow in a year has 60% probability; discount rate 10%. Risk-adjusted PV irNPV is the standard valuation method in which industry?Risk-adjusted NPV multiplies each cash flow by the