Which of the Following Are True with Respect to Using

question 20

Multiple Choice

Which of the following are true with respect to using real-option valuation (ROV ) versus decision tree analysis (DTA) ?
I.ROV is recommended when the future cash flows are closely linked to traded commodities.
II.DTA is recommended when the future cash flows are closely linked to traded currencies.
III.DTA is recommended when most of the underlying risk can be diversified away.
IV.DTA is recommended when only rough estimates are available for required inputs such as the underlying asset value and variance.

• A)I and II only.
• B)II and III only.
• C)I,III,and IV only.
• D)I,II,III,and IV.

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Definitions:

Behavioral Modification

A method of changing behavior through various techniques such as positive or negative reinforcement, primarily used in treatment and therapy.

Consequence

The result or effect of an action or condition, often one that is negative or undesirable.

Kaizen

A Japanese term meaning "continuous improvement," focusing on constant, incremental improvements in work processes or quality.

Reinforcer

Something that increases the likelihood of a behavior being repeated, used in behavior modification and conditioning theories.