Which of the following statements is CORRECT?
A) In general,the more uncertainty there is about market conditions,the more attractive it may be to wait before making an investment.
B) In general,the greater the strategic advantages of being the first competitor to enter a given market,the more attractive it probably is to wait before making an investment.
C) In general,the higher the discount rate,the more attractive it probably is to wait before making an investment.
D) In general,investment timing options are more valuable than abandonment options.
E) In general,abandonment options are rarely seen in the real world.

Question

Quizplus · Accepted Answer

When there is uncertainty about market conditions, there is a higher likelihood of making a wrong decision about investment timing. Therefore, it may be more rational to wait until the uncertainty is resolved before making an investment. This is known as the option to wait, which is valuable when there is uncertainty.

Which of the Following Statements Is CORRECT