A real option exists when a firm has the ability,but not the obligation,to invest in real assets of some type.

Question

Quizplus · Accepted Answer

A real option is an opportunity to invest in or divest from a real asset, such as a project, property, or other physical asset, without the obligation to do so. This option usually arises due to uncertainty or flexibility in the market or operating environment, and allows firms to delay making irreversible investment or divestment decisions until more information is available.

A Real Option Exists When a Firm Has the Ability,but