Which of the Following Will NOT Increase the Value of a Real

question 2

Multiple Choice

Which of the following will NOT increase the value of a real option?

• A) Lengthening the time in which a real option must be exercised.
• B) An increase in the volatility of the underlying source of risk.
• C) An increase in the risk-free rate.
• D) An increase in the cost of obtaining the real option.
• E) A decrease in the probability that a competitor will enter the market of the project in question.

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Definitions:

Difficult To Administer

Describes processes, systems, or regulations that are complex or cumbersome to manage, often due to intricacy, multitude of components, or lack of clarity.

Farsighted Organizations

Organizations that prioritize long-term goals and outcomes over immediate gains, often incorporating strategic planning and forward-thinking.

Strategic Farsightedness

The ability of an organization to look beyond immediate challenges and plan for long-term opportunities and risks.

Flexible Structure

An organizational framework that can quickly adapt to changes in the environment, allowing for innovation, scalability, and responsiveness.