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:

Greater Than 100 Km

A phrase generally used to describe depths or distances that exceed 100 kilometers.

Less Than 100 Km

A distance measurement indicating a range or limit smaller than 100 kilometers.

Strike-slip Fault

A type of fault where the movement of tectonic plates is horizontal, parallel to the fault line.

Reverse Fault

A type of geological fault where the hanging wall moves upward relative to the footwall, usually as a result of compressional forces.