5. Introduction to real options Consider the following statement about real options: Certain real options allow companies to change capacity output in response to changing market conditions. True or False: The preceding statement is correct. True False Which type of real option allows the output and/or inputs in the production process to be altered, depending on how market conditions change during a project's life? Flexibility option Timing option Abandonment option Expansion option Consider the following example: Smoltz Motors has plants around the country that specialize in specific models of cars. Smoltz has determined that lower demand has led the firm's inventory of SUVs to be too high. Smoltz wants to stop production for its SUVs and focus on its sedans. This example describes a real option to