You are a gold producer and have noticed that the value of your business may increase even though the price of gold falls.Your explanation for this phenomenon is
A) that the relationship between the value of future cash flows and interest rates is positive.
B) that increased risk may increase the real option value of the firm.
C) that cheaper gold prices are good for the economy and that must be good for the firm.
D) none of the above
Correct Answer:
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