Which of the Following Statements Regarding Real Options Is NOT

question 32

Multiple Choice

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

• A)Real options build greater flexibility into a project and thus increase its net present value (NPV).
• B)Real options should only be exercised when they increase the NPV of a project.
• C)Real options give owners the right, but not the obligation, to exercise these opportunities at a later date.
• D)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.

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Definitions:

Noble Gas Elements

Elements in group 18 of the periodic table, known for their lack of reactivity due to having full valence electron shells.

Electrons

Negatively charged subatomic particles found in all atoms, orbiting the nucleus and involved in chemical bonds and electricity.

Octet Rule

A chemical rule of thumb that atoms of main-group elements tend to combine in such a way that each atom has eight electrons in its valence shell, giving it the same electron configuration as a noble gas.

Isoelectronic

Describing atoms, ions, or molecules that have the same number of electrons and thus similar electron configurations.