Asked by J. Michael Berner on Jun 17, 2024
Verified
Which of the following is an example of a real option?
A) The option to abandon a project is a real option.
B) A call option to abandon a project is a real option.
C) A put option to sell a common stock is a real option.
D) None of the above are real options.
Put Option
A financial contract giving the holder the right, but not the obligation, to sell a specified amount of an underlying asset at a specified price within a specified time.
Real Option
A real option refers to the choice or flexibility a company has to make business decisions, such as expanding, deferring, or abandoning a project based on changes in market conditions.
- Discern assorted types of real options, like the choice to augment, discontinue, or put off a project.
Verified Answer
Learning Objectives
- Discern assorted types of real options, like the choice to augment, discontinue, or put off a project.
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