Which of the Following Is Most CORRECT

question 8

Multiple Choice

Which of the following is most CORRECT?

• A) real options change the risk, but not the size, of projects' expected cash flows.
• B) real options are likely to reduce the cost of capital that should be used to discount a project's expected cash flows.
• C) very few projects actually have real options.
• D) real options are less valuable when there is a lot of uncertainty about the true values future sales and costs.
• E) real options change the size, but not the risk, of projects' expected cash flows.

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Definitions:

Surplus

An excess of production or supply over demand, often resulting in lower prices or wasted resources.

Demand for Electronic Readers

The consumer desire or market requirement for digital devices designed for reading e-books and similar electronic documents.

Supply

The total amount of a specific good or service that is available to consumers at a given price level, at a specific time.