Real-option investments are attractive to managers in industries that are characterized by ________ and ________.
A) low capital investments; low degrees of uncertainty
B) large capital investments; high degrees of uncertainty
C) small market share; lots of research and development data
D) large market share; little research and development data

Question

Quizplus · Accepted Answer

Real-option investments involve large capital investments with high degrees of uncertainty. This is because real-options allow managers to invest in projects that have uncertain outcomes, but with the potential for high returns. Industries that have rapidly changing conditions, unexpected events, and high levels of competition are more likely to benefit from real-option investments.

Real-Option Investments Are Attractive to Managers in Industries That Are