Question: Decision trees are an important tool for evaluating real options because they a. include the option to purchase the minimum or the maximum of two

Decision trees are an important tool for evaluating real options because they

a. include the option to purchase the minimum or the maximum of two or more assets.

b. use the same cost of capital throughout the analysis.

c. facilitate an explicit identification of the embedded options. (correct answer)

d. exchange one asset for another.

C

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