The underlying premise of the real options approach is that __________.
A)delaying an investment may lead to greater returns or may lead to elimination of marginal projects
B)rushing into an investment more quickly may lead to lower returns or may lead to elimination of marginal projects
C)delaying an investment may lead to increased costs due to delays
D)rushing into an investment more quickly may lead to less risk

Question

Quizplus · Accepted Answer

The real options approach suggests that delaying an investment may lead to higher returns because it allows for more information to be gathered and reduces the risk of investing in marginal projects. Conversely, rushing into an investment may lead to lower returns or even the elimination of potentially profitable projects due to lack of information and higher risk.

The Underlying Premise of the Real Options Approach Is That