Which One of the Following Will NOT Increase the Value

question 28

Multiple Choice

Which one of the following will NOT increase the value of a real option?

• A) Lengthening the time during which a real option must be exercised.
• B) An increase in the volatility of the underlying source of risk.
• C) An increase in the risk-free rate.
• D) An increase in the cost of obtaining the real option.
• E) A decrease in the probability that a competitor will enter the market of the project in question.

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Definitions:

Racing Heartbeat

A rapid increase in heart rate, often due to excitement, stress, or physical exertion.

Spinal Reflex

A rapid, automatic response initiated in the spinal cord without conscious brain involvement, typically in response to a stimulus.

Sensory Neuron

A type of neuron responsible for converting external stimuli from the environment into internal electrical impulses.

Motor Neuron

A type of neuron responsible for conveying impulses from the brain or spinal cord to muscles or glands, enabling movement and action.