Firms spend an increasing amount of time evaluating real options,which are:
A) options on real assets such as an option to abandon.
B) call and put options traded on organized exchanges.
C) call options such as warrants and convertible bonds.
D) put options such as held by shareholders of a firm with financial leverage.

Question

Quizplus · Accepted Answer

Real options refer to options on real assets, such as the option to abandon a project, to delay investment, or to expand operations. These options are not traded on organized exchanges and are unique to each individual firm's situation. Therefore, firms spend an increasing amount of time evaluating real options to make informed decisions about their investments in the future.

Firms Spend an Increasing Amount of Time Evaluating Real Options,which