Which of the following will NOT increase the value of a real option? A) Lengthening the time in which a real option must be exercised. B) An increase in the volatility of the underlying source of risk. C) An increase in the risk-free rate. D) An increase in the cost of obtaining the real option. E) A decrease in the probability that a competitor will enter the market of the project in question.

Question

Quizplus · Accepted Answer

An increase in the cost of obtaining the real option will not increase its value; instead, it will decrease the net benefit of the option.

Which of the Following Will NOT Increase the Value of a Real