Real options are important in providing a bridge between:
A) important investment decisions.
B) strategic analysis and capital budgeting.
C) general tendencies in industries.
D) economic profits and discretionary future investments.

Question

Quizplus · Accepted Answer

Real options help in connecting strategic analysis, which involves analysis of the future opportunities and threats, with capital budgeting, which involves selecting the best investment opportunities among available alternatives. It allows incorporating flexibility in decision-making and considering the value of future options in current decisions. This approach helps in improving the quality of investment decisions, especially in uncertain and rapidly changing environments. Real options are not directly related to tendencies in industries or economic profits alone.

Real Options Are Important in Providing a Bridge Between