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This issue has two parts. Real Options is a risk management technique that uses an options framework to evaluate investments in nonfinancial assets. Many firms
This issue has two parts.
Real Options is a risk management technique that uses an options framework to evaluate investments in nonfinancial assets. Many firms are using options analysis to analyze risks involved in capital budgeting. While some firms have actually moved to full blown options analysis, other firms have used the techniques to modify more traditional analyses of risk. The concepts are particularly suited to assessing risks on projects that will have additional decision points over their duration. An article entitled,
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