1. Introduction to real options Consider the following statement about real options: Sometimes real options can give managers the flexibility to decide to invest in a project or wait to make a more calculated decision True or False: The preceding statement is correct. O False True Which type of real option allows a firm to shut down a project if its cash flows are lower than expected? Flexibility option O Investment timing option Abandonment option Growth Consider the following example: Smoltz Motors has plants around the country that specialize in specific models of cars. Smoltz has determined that lower demand has led the firm's inventory of SUVs to be too high. Smoltz wants to stop production for its SUVs and focus on its sedans. This example describes a real option to