Which of the Following Is Not True About Real Options

question 91

Multiple Choice

Which of the following is not true about real options?

• A) All investment decisions contain identifiable and measurable real options.
• B) Under certain circumstances, management may be able to delay their initial investment in a project or M&A.
• C) Real options may be valued as the expected value of various alternative cash flow projections.
• D) Real options can be valued using the Black-Sholes method.
• E) None of the above

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Definitions:

Decrease Assets

Decrease in assets refers to a reduction in the economic resources controlled by a company, which can result from expenses, asset disposals, or liabilities being paid off.

Accounting Equation

The foundational equation in accounting, represented as Assets = Liabilities + Owner's Equity, illustrating a company's financial position.

Liabilities

Financial obligations or debts a company owes, which are expected to be paid in the future.

Increase Assets

The act of adding value to a company's assets through acquisitions, improvements, or successful business operations, leading to growth in the company's overall resources.