Which of the Following Statements Is False

question 10

Multiple Choice

Which of the following statements is false?

• A) If there is a lot of uncertainty, the benefit of waiting is diminished.
• B) In the real option context, the dividends correspond to any value from the investment that we give up by waiting.
• C) By delaying an investment, we can base our decision on additional information.
• D) Given the option to wait, an investment that currently has a negative-NPV can have a positive value.

---

Definitions:

Market Risk Premium

The additional return expected by an investor for holding a risky market portfolio instead of risk-free assets.

Risk-Free Rate

The hypothetical yield on a risk-free investment, often exemplified by state-issued bonds.

Cost Of Equity

The return that a company must offer investors to compensate for the risk of investing in its shares.