Which of the following best describe the term managerial options or real options.
A) The percentage change in operating cash flow relative to the percentage change in quantity sold.
B) The sales level that results in a zero NPV.
C) Costs that do not change when the quantity of output changes during a particular time period.
D) The possibility that errors in projected cash flows lead to incorrect decisions.
E) Opportunities that managers can exploit if certain things happen in the future.

Question

Quizplus · Accepted Answer

Managerial or real options refer to opportunities that managers have to make decisions in the future based on the unfolding of certain events. These options provide flexibility to adapt and make decisions as circumstances change, such as expanding operations, abandoning a project, or deferring a decision.

Which of the Following Best Describe the Term Managerial Options