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

question 17

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

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Definitions:

Liability

The legal responsibility or obligation to compensate someone else for harm or damage caused by one's actions or failure to act.

Time Paper

Commercial paper or negotiable instruments, like promissory notes or bills of exchange, that have a specific maturity date.

Overdue

Referring to something, such as a payment or task, that has not been completed or paid by its due date.

Sunday

The day of the week considered the first day by some cultures and calendars and the seventh day by others, often associated with rest and religious activities.