When evaluating a project, the best approach always is A the NPV approach B the IRR approach C the payback period approach D the option model approach When using the straight NPV approach (ignoring optionality), A a straight negative NPV project will always be rejected B a straight negative NPV project may be accepted based on real options C a straight positive NPV project should not be accepted D a straight positive NPV can turn negative when real options are included When analyzing real options, which of the following statements is FALSE A The Black Scholes Merton (BSM) model can be used for real options B The binomial or multinomial model (tree) can be used for real options C Both models, BSM and tree can be combined with time value of money D None of the above Which of the following options allows a corporation to manage the downside risk of a project A Abandonment option B Expansion option C Extension option D None of the above In order to exploit a business opportunity, which of the following options are useful A Contraction option B Abandonment option C Extension option D Deferment option

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Question: When evaluating a project, the best approach always is A. the NPV approach. B. the IRR approach. C. the payback period approach. D. the option

When evaluating a project, the best approach always is A. the NPV approach.
B. the IRR approach. C. the payback period approach. D. the option model approach.
When using the straight NPV approach (ignoring optionality), A. a straight negative NPV project will always be rejected. B. a straight negative NPV project may be accepted based on real options. C. a straight positive NPV project should not be accepted. D. a straight positive NPV can turn negative when real options are included.
When analyzing real options, which of the following statements is FALSE? A. The Black-Scholes-Merton (BSM) model can be used for real options. B. The binomial or multinomial model (tree) can be used for real options. C. Both models, BSM and tree can be combined with time value of money. D. None of the above.
Which of the following options allows a corporation to manage the downside risk of a project? A. Abandonment option. B. Expansion option. C. Extension option. D. None of the above.
In order to exploit a business opportunity, which of the following options are useful? A. Contraction option.B. Abandonment option. C. Extension option. D. Deferment option.

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