A(n) ________ allows management to avoid or minimize losses on projects that turn bad.
A) abandonment option
B) growth option
C) timing option
D) put option

Question

Quizplus · Accepted Answer

An abandonment option allows management to cut losses by abandoning or cancelling a project that is not performing well or is no longer feasible. This option provides a financial safety net for the company and helps minimize losses. A growth option is a financial instrument that allows a company to expand and increase revenue. A timing option is a financial instrument that allows a company to choose the best time to enter the market or execute a project. A put option is a financial instrument that allows an investor to sell an asset at a specific price by a certain date. None of the other options are directly related to minimizing losses on projects.

A(n) ________ Allows Management to Avoid or Minimize Losses on Projects