The Estimated Value of a Real Option

question 60

Multiple Choice

The estimated value of a real option:

• A) Is affected by essentially the same set of factors that affect the value of financial options.
• B) Cannot be incorporated into a conventional DCF analysis of an investment project.
• C) Is affected by the length of the expiration date of the option.
• D) Decreases as the underlying risk of a project increases.
• E) Is inversely related to estimated volatility of returns for a proposed project.

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Definitions:

Control

In computing, it refers to a graphical component or widget in graphical user interfaces that enables user interactions, such as buttons, sliders, or text boxes.

Property

An attribute or characteristic of an object, element, or entity, often used in programming to store and manipulate data.

Number Field

A data field designed to contain numerical entries, often used in databases and forms to ensure data consistency and facilitate calculations.

Store Values

A concept in programming where data is saved in a variable or a data storage location.