Which of the Following Best Describes Real Options

question 9

Multiple Choice

Which of the following best describes real options?

• 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.

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