The Major Principles to Remember When Considering Real Options Include

question 58

Multiple Choice

The major principles to remember when considering real options include all of the following EXCEPT:

• A)out-of-the-money real options have value.
• B)in-the-money real options need to be exercised immediately.
• C)waiting is valuable.
• D)create value by exploiting real options.

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Definitions:

Normal Fault

A type of fault where the hanging wall has moved downward relative to the footwall, typically associated with extensional tectonics.

Horizontal Compression

A stress regime where forces push inwards from opposite sides, often leading to folding, faulting, or shortening of the Earth's crust.

Horizontal Tension

The stress exerted in a horizontal direction, often leading to stretching and thinning of the crust.

Confining Pressure

The pressure applied to a rock from all directions beneath the Earth's surface, often affecting the rock’s physical properties and deformation.