Option to Abandon a Project Is a Real Option, but a Call

question 8

True/False

option to abandon a project is a real option, but a call option on a stock is not a real option.

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Definitions:

Smaller Number

A value or quantity that is less than another in a given set or range of numbers.

Fair 6-Sided Dice

Refers to an equally balanced die where each of the six faces, numbered from 1 to 6, has an equal probability of landing face up when thrown.

Record

A document or entity that preserves information or data for future reference.

Law of Averages

A layman's term often misused to suggest that a future event is likely to occur to balance out a statistical deviation, though not a formal statistical principle.