When a firm undertakes a project and obtains an option to do another project in the future,it is often referred to as a ________.

Question

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Obtaining an option to do another project in the future is a type of growth option, as it provides the firm with the opportunity to expand its operations in the future. A put option gives the buyer the right to sell an asset at a specific price, while a call option gives the buyer the right to buy an asset at a specific price. A hedge is a strategy used to minimize risk.

When a Firm Undertakes a Project and Obtains an Option