Which of the Following Statements Regarding Real Options Is Not

Multiple Choice

Which of the following statements regarding real options is not true?

A) Similar to financial options, real options are traded on an open exchange.
B) Their consideration in capital budgeting analysis is designed to complement conventional DCF models.
C) They refer to options on real assets (i.e., tangible and intangible property) .
D) They can never reduce the NPV of a proposed investment; they can only increase its NPV.
E) They represent one way of handling risk and uncertainty in the capital budgeting process.