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a)In the framework of valuing an option to delay an investment, if the average expected price remains the same, but the probability of facing a
- a)In the framework of valuing an option to delay an investment, if the average expected price remains the same, but the probability of facing a low price next period becomes smaller, then the NPV of waiting to invest next period will be higher. True or False
- b)Any rational investor always prefers a project that gives him, or her, the option to wait to invest next year instead of a project that offers a now or never choice. True or False
- c)If the uncertainty over prices next period increases, that is, the gap between the possible high price and the possible low price next period increases, keeping the average expected price constant, waiting to invest next period becomes more valuable. True or False
explain the reason behind it
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