The following are examples of disguised options for firms:
I. acquiring growth opportunities
II. ability of the firm to terminate a project when it is no longer profitable
III. options that are associated with corporate securities that provide flexibility to change the terms of the issues
A) I only
B) II only
C) I and III only
D) I, II, and III

Question

Quizplus · Accepted Answer

All three are examples of disguised options for firms: acquiring growth opportunities (I) represents the option to expand, terminating a project (II) is the option to abandon, and options associated with corporate securities (III) provide flexibility, all of which are strategic options embedded in business decisions.

The Following Are Examples of Disguised Options for Firms