Real Options Analysis (ROA)is an Investment Analysis Tool from the Field

question 37

Multiple Choice

Real options analysis (ROA) is an investment analysis tool from the field of finance.When applied to entrepreneurship,it suggests a path that companies can use to manage the ________ associated with launching ________ ventures.

• A) certainty; large
• B) risk; stable
• C) uncertainty; new
• D) interests; new

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Definitions:

Diminishing Returns

A rule that asserts when one input in the production process is augmented without changes to the others, there will ultimately be a decline in output after reaching a specific level.

Average Fixed Cost

The cost per unit that remains constant regardless of the level of production or output.

Output

The total amount of goods or services produced by a company or economy.

Total Cost

The total expense incurred in the production of goods or services, including both fixed and variable costs.