Abandonment options provide firms flexibility by allowing them to:
A) confer multiple options that are built upon one another.
B) exit deteriorating competitive situations.
C) combine features of various options.
D) combine irreversibility and uncertainty.

Question

Quizplus · Accepted Answer

Abandonment options give firms the option to exit deteriorating competitive situations, such as ending unprofitable projects, shutting down unproductive operations, or withdrawing from unprofitable markets. This flexibility can help firms avoid further losses and focus on more lucrative ventures.

Abandonment Options Provide Firms Flexibility by Allowing Them To