Definition
Real Options Valuation is a method of valuing potential investments using the concept of options, which considers the flexibility and choices available to manage uncertainty and capitalize on opportunities.
Frequently asked questions
What is the real option method of valuation?
The real option method values investments by considering the flexibility to adapt decisions, like expanding or halting projects, based on future market conditions.
What is the concept of real options?
Real options give a company the flexibility to make decisions, like delaying or expanding a project, based on changing circumstances.
What is a real option?
A real option is the right, but not the obligation, to make a business decision, like delaying a project, based on changing circumstances.