True, False, or Uncertain: "The existence of a real option influences not only expected
future cash flows, but it may also affect the cost of capital." Explain.

Name: True, False, or Uncertain: "The existence of a real option influences not only expected future cash flows, but it may also affect the cost of capital." Explain.
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Question

Quizplus · Accepted Answer

If the existence of the real option allows a firm to avoid losses when the stock market goes down, the result will be a lower market beta and, thus, a lower cost of capital.

True, False, or Uncertain: "The Existence of a Real Option