Question

Projects are also often embedded with different options that can help making decisions under uncertainty. There are techniques used to evaluate these embedded options which are called real options. The models used to value these options are based on the type of the real option available for the project. Real options the value of capital investment projects.

A real option embedded in a capital project gives the investing firm the right but not the obligation to buy, sell, or transform an asset at a set price during a specified period of time.

a. True
b. False

Answer 1

a. True

Step-by-step explanation:

The real option should be used in the decision that made for the capital investment in order to rise the worth of the project. So it rise the capital investment value for the project. Also a real option in a capital asset provides the right to the investing firm but not the liability to purchase or sell or transform the asset at a fixed price

Therefore the given statement is true