Real options are 'real' because the immediate underlying asset is a:
A) real asset.
B) financial security.
C) stock investment.
D) downside obligation.

Question

Quizplus · Accepted Answer

Real options are based on real assets, which are physical assets such as real estate, factories, and equipment. These assets have intrinsic value that can be used in the decision-making process for investing in options related to them. Financial securities, stock investments, and downside obligations do not have the same level of intrinsic value and therefore cannot be considered as real options.

Real Options Are 'Real' Because the Immediate Underlying Asset Is