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Real options
How Real Options Enhance Decision-Making in Investment Strategies
December 13, 2023
Can you explain the concept of real options in capital budgeting?
Real options in capital budgeting refer to the flexibility to alter investment decisions based on changing market conditions. Similar to financial options, real options allow companies to respond to uncertainties by delaying, expanding, or abandoning projects. This approach adds value by adapting to market fluctuations, enabling companies to capitalize on favorable conditions while mitigating risks during unfavorable times.
Tags : Real Options , Investment Analysis , Strategic Decision-Making