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Managerial Option Quiz

The investment proposal with the greatest relative risk would have

Probability-tree analysis is best used when cash flows are expected to be

You are considering two mutually exclusive investment proposals, project A and project B. B's expected value of net present value is $1,000 less than that for A and A has less dispersion. On the basis of risk and return, you would say that

If two projects are completely independent (or unrelated), the measure of correlation between them is:

Managerial options can be viewed as

A managerial option, in effect,

When using a probability tree approach, we discount the various cash flows to their present value at

The presence of managerial, or real, options_______the worth of an investment project.