If an Oil Well Allows the Investor the Option to Drill

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 exceed the present value of future expected oil prices.
D) The present value of oil must be higher than the future value of oil.