Which of the following statements is FALSE?[Fill in the blank]

Question

BlackTom AI · Accepted Answer

Real options arise when the ability to delay, expand, contract or abandon an investment adds value because future uncertainty can be resolved; valuing them requires recognizing that the option’s payoff depends on project-specific, non-traded risks.

1) Relevant knowledge points and concepts
- Net present value (NPV) rule: if a project has positive NPV and you have no timing option, undertaking it increases firm value (so you should invest).
- Option to wait (real option): treating “invest now” vs “wait” as mutually exclusive choices frames the timing decision as an option; waiting can have positive value because uncertainty may be resolved.
- Option valuation prerequisites: traditional financial option pricing (e.g., Black–Scholes) assumes a traded underlying asset and the ability to hedge continuously; many real options lack a directly traded underlying and are project- or firm-specific.

2) Step-by-step reasoning
- Statement a: If you cannot wait, you cannot capture timing value; therefore the NPV criterion applies directly—invest if NPV > 0. This is textbook true under standard assumptions.
- Statement b: The decision “invest now or wait” is indeed equivalent to choosing between two mutually exclusive courses (immediate project vs retaining the option to invest later). This framing explains why some positive-NPV opportunities are postponed: the option to wait can be worth more than immediate exercise.
- Statement d: You only exercise (invest) today if immediate NPV exceeds the value of waiting. That is the optimal exercise rule for a real option—invest when immediate payoff > option value. This is correct.
- Statement c (the candidate false): It claims real options and their underlying assets are often traded in competitive markets. In reality, most real options depend on firm-specific projects (R&D, capacity expansion, proprietary technology, unique resource deposits). These underlying exposures are not directly traded, so you cannot usually replicate or hedge perfectly in a competitive market. Therefore standard market-based option pricing cannot be applied directly without adjustments. Black–Scholes assumptions fail for many real options.

3) Calculations
- No numerical calculations are required for these conceptual statements.

4) Why the correct answer is correct
- Because most real options’ underlying assets are project-specific and non-traded, statement c is false.

5) Why the other options are incorrect (brief)
- a, b, and d are conceptually correct descriptions of NPV vs. option-to-wait reasoning and the exercise decision.

Conclusion: Statement c is the false statement, matching the provided answer.

Which of the following statements is FALSE?[Fill in the blank]单项选择题

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