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exteesy07 exteesy07
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Which of the following statements regarding real options is correct?


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Real options involve both “real” and “financial” assets.



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An investment timing option is the ability to abandon a project if the cash flows turn out to be lower than expected. It reduces the risk of a project and increases its value.



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The abandonment option involves the possibility of delaying major expenditures until more information on likely outcomes is known.



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A flexibility option is the option to modify operations depending on how conditions develop during a project’s life, especially the type of output produced or the inputs used.

Textbook 
Financial Management: Theory and Practice

Financial Management: Theory and Practice


Edition: 4th
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Thanks for your help!!
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