Which of the Following Statements Regarding Real Options Is NOT

question 63

Multiple Choice

Which of the following statements regarding real options is NOT correct?

• A) Real options should only be exercised when they increase the NPV of a project.
• B) Real options enhance the forecast of a project's expected future cash flows by incorporating, at the start of the project, the effect of decisions that will be made at a later date.
• C) Real options give owners the right, but not the obligation, to exercise these opportunities at a later date.
• D) Real options build greater flexibility into a project and thus increase its net present value (NPV).

---

Definitions:

Cones

Visual sensory receptors found at the back of the retina, responsible for color vision and sharpness of vision.

Similarity

The state of being alike or having attributes in common, often used in various contexts such as psychology, mathematics, and everyday comparisons.

Sensory Adaptation

Tendency of sensory receptor cells to become less responsive to a stimulus that is unchanging.

Sensory Receptors

Specialized cells or structures in organisms that detect and respond to external stimuli from the environment, such as light, sound, and pressure.