Multiple Choice
If an oil well allows the investor the option to drill later, what must happen for the option to be exercised?
A) Interest rates must increase.
B) The probability of oil prices increasing must be less than the probability of oil prices decreasing.
C) Oil prices must be high relative to possible future prices.
D) The present value of oil must be higher than the future value of oil.
Correct Answer:
Verified
Correct Answer:
Verified
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