Briefly Explain What Is Meant by a Real Option in Capital

question 79

Essay

Briefly explain what is meant by a real option in capital budgeting.Give two concrete examples.

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Definitions:

Bailment

The legal relationship established when one person (the bailor) entrusts their personal property to another (the bailee) for a specific purpose, with the expectation of return.

Bailee

A person or entity that temporarily holds property belonging to another under a bailment agreement, responsible for the safekeeping of the property.

Deliver

To physically transfer an item or to fulfill a promise or obligation.

Document Of Title

A legal document representing ownership of goods and providing the right to transfer that ownership.