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Consider the following statement about real options: Decision tree analysis is more commonly used in valuing securities than real assets True or False: The preceding

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Consider the following statement about real options: Decision tree analysis is more commonly used in valuing securities than real assets True or False: The preceding statement is correct. True False Which type of real option allows a project to be expanded if demand turns out to be greater than expected? flexibility option Abandonment option Growth option investment timing option Consider the following example: King Snowplows began operations in New York City two years ago. As an independent contractor, the company does the majority of its business working for the city. The company also had offer from surrounding dies in New Jersey and Long Island, but these offers would have required the company to Invest W additional snowplows which have high op-front costs. King Snowplows decided to purchase only the snowplows necessary to handle its contract with New York City. The company will pursue the additional contracts with the cities in New Jersey and Long Island In the future if it thinks mat the additional contracts Justify investing more snowplows

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