Question

Which of the following is NOT a real option? a. The option to abandon a project. b. The option to expand into a new geographic region. c. The option to buy shares of stock if its price goes up. d. The option to expand production if the product is successful. e. The option to switch the type of fuel used in an industrial furnace.

Answer 1

Answer:

E is the correct option.

Explanation:

The choices which are available to the managers of a company for the business development opportunities are called real choice. It is called real because it refers to the projects which involve tangible assets instead of the financial instruments. Tangible assets are physical assets which can include machinery, buildings, lands, and inventory. Real options are the choices that are made by a company's top management for expanding and changing their projects.