Which of the Following Statements Is FALSE

question 22

Multiple Choice

Which of the following statements is FALSE?

• A)It is tempting to use the Black-Scholes formula to value future growth options,but often there are good reasons why this formula might not price these options correctly.
• B)When a firm has a real option to invest in the future it is known as a growth option.
• C)Because growth options have value,they contribute to the value of any firm that has future possible investment opportunities.
• D)Future growth opportunities can be thought of as a collection of real put options on potential projects.

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Definitions:

Oil Spill

The release of liquid petroleum hydrocarbons into the environment, especially marine areas, leading to pollution.

Geologic Resources

Naturally occurring materials of economic value extracted from the Earth, including minerals, fossil fuels, and groundwater.

Floodplains

Flat or nearly flat land adjacent to a stream or river that experiences occasional or periodic flooding.

Cement Plant

A facility that produces cement from raw materials through a process of grinding and calcination.