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One possible method to estimate risk neutral probabilities to value real options is: a. Assign probabilities that suit your subjective judgement. b. Assume equal probabilities
One possible method to estimate risk neutral probabilities to value real options is:
a.
Assign probabilities that suit your subjective judgement.
b.
Assume equal probabilities across all scenarios.
c.
Use forecast information from traded securities that span the same set of scenarios as the underlying driver of the real option.
d.
Assume risk neutral probabilities are the same as the actual probabilities.
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