An Insight Gained by Bringing the Theory of Options into Standard

question 24

Multiple Choice

An insight gained by bringing the theory of options into standard capital budgeting analysis is:

• A) independent projects with positive NPVs should very often be rejected.
• B) independent projects with negative NPVs should very often be accepted.
• C) projects, as call options, can be more valuable if the decision to start up the project is delayed until relevant information is released.
• D) projects, as call options, can be less valuable if the decision to start up the project is delayed until relevant information is released.

---

Definitions:

Labeling

The process by which individuals or groups are assigned a label that defines them, often leading to societal stigma or stereotyping.

Differential Association

A theory in sociology positing that people pick up deviant behaviors from their close contacts who act as examples of and give chances for engaging in such behaviors.

Customary Norms

Rules of behavior that are based on long-standing practices or traditions within a society or group.

Informal Deviance

Behaviors that violate informal social norms or expectations, which are not codified into law.