If an Oil Well Allows the Investor the Option to Drill

question 32

Multiple Choice

If an oil well allows the investor the option to drill later,what must happen for the option to be exercised?

• A)Interest rates must increase.
• B)The probability of oil prices increasing must be less than the probability of oil prices decreasing.
• C)Oil prices must exceed the present value of future expected oil prices.
• D)The present value of oil must be higher than the future value of oil.

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Definitions:

Stakeholder Representatives

Individuals who act on behalf of specific groups interested in or affected by the outcome of a project or decision.

Corporate Governance

The structures, policies, and practices in place within an organization to ensure accountability, fairness, and transparency in the company's relationship with its stakeholders.

Inside Directors

Board members who are also employees, officers, or stakeholders in the company, providing them with detailed knowledge of its business operations.

Outside Directors

Members of a company's board of directors who are not part of the company's day-to-day operations and are often brought in for their expertise or to provide an objective perspective.