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).

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Definitions:

Reduced Time

Strategies or measures implemented to decrease the amount of time required to perform a task or process, often leading to increased efficiency.

Crowding

A situation where excess demand in a confined space or system leads to uncomfortable or inefficient conditions, often observed in urban areas, public transport, or event management.

Mass Irritation Phenomenon

A social or psychological phenomenon where a large number of individuals feel annoyance or discomfort due to a common cause.

Space Deficit Arousal

Space Deficit Arousal is the psychological state induced by a lack of personal space or crowded conditions, often leading to stress or discomfort.