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7) Which of the following is FALSE? A. In particular, because real options allow a decision maker to choose the most attractive alternative after new
7) Which of the following is FALSE? A. In particular, because real options allow a decision maker to choose the most attractive alternative after new information has been learned, the presence of real options adds value to an investment opportunity. B. To make an investment decision correctly, the value of embedded real options should be included in the decision making process. C. A key distinction between a real option and a financial option is that real options, and the underlying assets on which they are based, are often traded in competitive markets. D. We can compute the value of the real option by comparing the expected profit without the real option to the value with the option. 8) Which of the following is NOT a real option? A. A stock option B. An abandonment option C. An investment timing option D. An expansion option 9) Which of the following statements is FALSE? A. Aside from the current NPV of the investment, other factors affect the value of an investment and the decision to wait B. The option to wait is the most valuable when there is a great deal of uncertainty regarding what the value of the investment will be in the future. C. The smaller the cost of waiting, the less attractive the option to delay becomes. D. It is always better to wait to invest unless there is a cost to doing so
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