1. Valuing real options Aa Aa Real options give the holder the right, but not the obligation, to undertake business decisions-typically those that involve capital investments Which of the following examples of assets are involved in the valuation of real options? O Stocks and bonds O Property, plant, and equipment True or False: The presence of managerial, or real, options decreases the value of an investment project. True False Which of the following statements is most accurate about real options? O Decision-tree analysis is more commonly used in valuing securities than in valuing real assets O Decision-tree analysis is widely used in finding the value of financial securities O Decision-tree analysis is much more important in valuing real options than valuing passive securities in financial options O Decision-tree analysis consists of creating in-depth analyses of the results of solely the most likely scenario Different methods are used to look for real options and valuing them. The following table lists five possible methods Select their order of simplicity with 1 being the most simple procedure and 5 being the most difficult procedure Technique 2 3 4 5 Develop a unique, project-specific model by using financial engineering techniques Use discounted cash flow valuation and include a qualitative recognition of any real option's value Use a standard model for a financial option Use discounted cash flow valuation and ignore any real options by assuming their values are zero Use decision-tree analysis