Viewing Strategy as a Portfolio of Options Rather Than a Portfolio

question 6

Multiple Choice

Viewing strategy as a portfolio of options rather than a portfolio of investments relies upon the rationale that:

• A)Uncertainty means that flexibility is valuable
• B)Committing to a long-term program of investment can be disastrous if circumstances change
• C)Most investment projects can be divided into a sequence of stages where,at any point of time,it is only necessary to decide the next stage
• D)All of these

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Definitions:

Profitability

A measure of how much profit a company generates compared to its revenues.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, often with interest.

Liquidity

The ease with which an asset can be converted into cash without significant loss in value.