1. valuing real options Aa Aa Real options give the holder the right, but not the obligation, to undertake business decisions-typically those that involve capital investments. what kind of options are tradeable? Real options Financial options True or False: The presence of managerial, or real, options decreases the value of an investment project. False O True which of the following statements is most accurate about real options? Decision-tree analysis is more commonly used in valuing securities than in valuing real assets. Decision-tree analysis consists of creating in-depth analyses of the results of solely the most likely scenario. Decision-tree analysis is widely used in finding the value of financial securities. Decision-tree analysis is much more important in valuing real options than valuing passive securities in financial options. Different methods are used to look for real options and valuing them. The following table lists five possible methods. Select their order of simplicity with 1 being the most simple procedure and 5 being the most difficult procedure. Technique 1 2 3 4 5 Use discounted cash flow valuation and ignore any real options by assuming their values are zero. Use decision-tree analysis Develop a unique, project-specific model by using financial engineering techniques Use discounted cash flow valuation and include a qualitative recognition of any real option's value Use a standard model for a financial option O O O O O O O O O O O O OO O