Which of the Following Statements Is False

question 6

Multiple Choice

Which of the following statements is false?

• A) Abandonment options can add value to a project because a firm can drop a project if it turns out to be unsuccessful.
• B) Corporate bonds often contain embedded abandonment options: The issuing firm sometimes has the option to convert the bond that is, to repay it.
• C) An abandonment option is the option to walk away.
• D) An important abandonment option that most people encounter at some point in their lives is the option to abandon their mortgage.

---

Definitions:

Withdraw

The act of removing funds from a bank account or the cessation of investment in a particular asset or undertaking.

Retire

The act of withdrawing from one's position or profession, often marking the end of one's career.

Invested Funds

Money or capital that has been invested in a business, project, or financial asset, often seeking to generate returns.

Annuity

A financial product that provides a series of payments made at equal intervals, which can be used as a retirement income strategy.