Which of the Following Statements Regarding Real Options Is Not

question 4

Multiple Choice

Which of the following statements regarding real options is not true?

• A) Similar to financial options, real options are traded on an open exchange.
• B) Their consideration in capital budgeting analysis is designed to complement conventional DCF models.
• C) They refer to options on real assets (i.e., tangible and intangible property).
• D) They can never reduce the NPV of a proposed investment; they can only increase its NPV.
• E) They represent one way of handling risk and uncertainty in the capital budgeting process.

---

Definitions:

Competencies

The knowledge, skills, abilities, and behaviors that are critical for successful job performance.

Clean Room Operations

Procedures and protocols for maintaining extremely low levels of pollutants in a controlled environment, often used in manufacturing or scientific research settings.

Associate's Degree

An undergraduate academic degree awarded by colleges and universities upon completion of a course of study lasting two years.

Organizational Culture

The shared values, beliefs, attitudes, and practices that characterize an organization and influence its members' behavior.