All of the Following Distinguish the Typical Real Option on Land

question 8

Multiple Choice

All of the following distinguish the typical real option on land development from the typical financial option on securities, except:

• A) The land development option is perpetual.
• B) The underlying asset value in the land development option can only be observed with "noise".
• C) Exercise of the land development option adds to the supply side of the market in which the underlying asset trades.
• D) The underlying asset in the case of the land development option typically pays income to the former option holder only upon exercise of the option.

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