Which of the Following Is Most CORRECT

question 10

Multiple Choice

Which of the following is most CORRECT?

• A) Real options change the size, but not the risk, of projects' expected cash flows.
• B) Real options change the risk, but not the size, of projects' expected cash flows.
• C) Real options are likely to reduce the cost of capital that should be used to discount a project's expected cash flows.
• D) Very few projects actually have real options.
• E) Real options are less valuable when there is a lot of uncertainty about the true values future sales and costs.

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Definitions:

Trial Balance

A bookkeeping worksheet in which the balances of all ledgers are compiled into debit and credit columns to ensure that the total debits equal the total credits in the financial statements.

Erroneous Amount

An incorrect or mistaken quantity or figure in financial or data reports.

Account Balances

The amounts of money present in or owed by an account at any given time.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends but is kept by the company for reinvestment in its core business or to pay debt.