Which of the Following Statements Regarding Real Options Is True

Multiple Choice

Which of the following statements regarding real options is true?

A) The farther away the expiration date, the less valuable the option is.
B) They can be incorporated into the capital budgeting decision process using decision trees.
C) They allow decision makers to react to unfavorable, but not favorable, future information/news.
D) Conventional DCF decision models (e.g., NPV) cannot incorporate the effects of real options.
E) It is not possible to handle multiple real options embedded in a proposed investment project.