Question: 1 . Real Options. Utility companies often face a decision to build new plants that burn coal, oil, or both. If the prices of both

1 .

Real Options. Utility companies often face a decision to build new plants that burn coal, oil, or both. If the prices of both coal and oil are highly volatile, how valuable is the decision to build a plant that can burn either coal or oil? What happens to the value of this option as the correlation between coal and oil prices increases?

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