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:

Associative Memory

The ability to learn and remember the relationship between unrelated items.

Déjà Vu

That eerie sense that “I’ve experienced this before.” Cues from the current situation may subconsciously trigger retrieval of an earlier experience.

State-dependent Memory

The phenomenon where information learned in a specific psychological or emotional state is more easily recalled when in the same state.

Factual Questions

Questions that seek specific, objective answers based on facts or reality.