The following are practical challenges in applying real-options analysis:
I.Real options can be complex.
II.The real options problems may not be well structured.
III.Competition may reduce or change the value of real options.
A)I only
B)I and II only
C)III only
D)I, II, and III

Question

Quizplus · Accepted Answer

Real options analysis can be complex due to the multitude of variables and uncertainty involved in decision-making. Real options problems may not be well structured, meaning that the decision-making process is not straightforward or clear-cut. Additionally, competition can impact the value of real options, as changes in the marketplace can alter the potential outcomes associated with different options. Therefore, all three options are practical challenges that must be considered in applying real-options analysis.

The Following Are Practical Challenges in Applying Real-Options Analysis