Which of the following best describes real options?
A)Real options change the size, but not the risk, of projects' expected cash flows.
B)Real options change the risk, but not the size, of projects' expected cash flows.
C)Real options are likely to reduce the cost of capital that should be used to discount a project's expected cash flows.
D)Very few projects actually have real options.

Question

Quizplus · Accepted Answer

Real options provide flexibility in investment decisions, potentially reducing risk and thus the cost of capital.

Which of the Following Best Describes Real Options