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:

Republican Party

One of the two major political parties in the United States, traditionally advocating for conservative policies, free-market principles, and smaller government.

Truman Administration

The presidency of Harry S. Truman from 1945 to 1953, notable for ending World War II, initiating the Marshall Plan, and navigating the early Cold War era.

Margaret Chase Smith

A prominent American politician and the first woman to serve in both houses of the U.S. Congress, representing Maine as a Republican.

Anticommunist Agenda

Policies and activities aimed at combating communism and limiting its spread during the Cold War era.