Which of the following will NOT increase the value of a real option?
A) lengthening the time in which a real option must be exercised
B) an increase in the volatility of the underlying source of risk
C) an increase in the risk-free rate
D) an increase in the cost of obtaining the real option

Question

Quizplus · Accepted Answer

An increase in the cost of obtaining the real option will decrease its value, as it makes the investment less attractive. A, B, and C will all increase the value of a real option.

Which of the Following Will NOT Increase the Value of a Real