Which of the Following Is NOT a Real Option

question 5

Multiple Choice

Which of the following is NOT a real option?

• A) The option to expand production if the product is successful.
• B) The option to buy shares of stock if its price goes up.
• C) The option to expand into a new geographic region.
• D) The option to abandon a project.
• E) The option to switch the type of fuel used in an industrial furnace.

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Definitions:

One-time Investment

An investment made with a single lump-sum payment, as opposed to recurring investments.

College Education

Attainment of higher learning and skills obtained by attending an institution of higher education, such as a college or university.

Insurance Settlement

The payment made by an insurance company to a claimant, policyholder, or beneficiary under the terms of the insurance policy.

Present Value

The current financial worth of a forthcoming sum of money or sequence of cash flows, with a particular rate of interest in mind.