Which of the Following Statements Regarding Real Options Is NOT

question 47

Multiple Choice

Which of the following statements regarding real options is NOT correct?

• A) Real options enhance the forecast of a project's expected future cash flows by incorporating, at the start of the project, the effect of decisions that will be made at a later date.
• B) Real options give owners the right, but not the obligation, to exercise these opportunities at a later date.
• C) Real options build greater flexibility into a project and thus increase its net present value (NPV).
• D) Real options should only be exercised when they increase the NPV of a project.

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