Use the following two statements to answer this question:
I.Real option valuation takes into account that a firm responds to different circumstances and changes its operating characteristics.
II.Real option valuation places great weight on the flexibility involved in a firm's operations.

Question

Quizplus · Accepted Answer

Both statements are correct and accurately describe the key components of real option valuation - that firms respond to changing circumstances and that flexibility is critical in their operations. Therefore, option valuation must take into account these factors.

Use the Following Two Statements to Answer This Question