When a company purchases an asset or resource, such as land, with the intention of holding onto it and using it for future expansion, the company has purchased an "intangible option."

Question

Quizplus · Accepted Answer

An option is a financial instrument that gives the holder the right, but not the obligation, to buy or sell an asset at a predetermined price on or before a specific date. A company purchasing an asset with the intention of holding onto it and using it for future purposes is simply investing in a tangible asset, not an intangible option.

When a Company Purchases an Asset or Resource, Such as Land