Strategic Management – Exam 6 & 7
Question 1 2..5 points
An oil company leasing land for potential exploration instead of buying it is an example
of the option to ________.
Question options:
a) defer
b) grow
c) contract
d) abandon
Question 2 2..5 points
The lower the ________ price, the greater is the value of a real option.
Question options:
a) stock
b) operational
c) exercise
d) market
Question 3 .5 points
A firm investing to create one product because that investment could lead to the
development of other products in the future is an example of the option to ________.
Question options:
a) defer
b) grow
c) contract
, d) expand
Question 4 2..5 points
To see whether valuing an investment as a real option creates any extra value for a
firm, it is necessary to establish a:
Question options:
a) timeline.
b) benchmark.
c) ceiling.
d) floor.
Question 5 2..5 points
Strategic options exist when firms have the ________, but not the ________, to invest in a
particular strategy.
Question options:
a) ability; obligation
b) obligation; ability
c) money; people
d) people; money
Question 6 2..5 points
The greater the uncertainty about future ________, the greater is the value of a real
option.
Question options:
a) interest rates
b) cash flows
c) profitability
, d) economic cycles
Question 7 2..5 points
A decision making setting is said to be ________ when the outcomes of that decision are
not known with certainty, and the possible outcomes associated with that decision, and
their probability, are also not known before a decision is made.
Question options:
a) risky
b) uncertain
c) strategic
d) typical
Question 8 2..5 points
The longer the time to ________, the greater is the value of a real option.
Question options:
a) market
b) profitability
c) exercise
d) maturity
Question 9 .5 points
Under conditions of uncertainty, cash flow projections are ________.
Question options:
a) simply unreliable
b) fairly certain
c) risk free
Question 1 2..5 points
An oil company leasing land for potential exploration instead of buying it is an example
of the option to ________.
Question options:
a) defer
b) grow
c) contract
d) abandon
Question 2 2..5 points
The lower the ________ price, the greater is the value of a real option.
Question options:
a) stock
b) operational
c) exercise
d) market
Question 3 .5 points
A firm investing to create one product because that investment could lead to the
development of other products in the future is an example of the option to ________.
Question options:
a) defer
b) grow
c) contract
, d) expand
Question 4 2..5 points
To see whether valuing an investment as a real option creates any extra value for a
firm, it is necessary to establish a:
Question options:
a) timeline.
b) benchmark.
c) ceiling.
d) floor.
Question 5 2..5 points
Strategic options exist when firms have the ________, but not the ________, to invest in a
particular strategy.
Question options:
a) ability; obligation
b) obligation; ability
c) money; people
d) people; money
Question 6 2..5 points
The greater the uncertainty about future ________, the greater is the value of a real
option.
Question options:
a) interest rates
b) cash flows
c) profitability
, d) economic cycles
Question 7 2..5 points
A decision making setting is said to be ________ when the outcomes of that decision are
not known with certainty, and the possible outcomes associated with that decision, and
their probability, are also not known before a decision is made.
Question options:
a) risky
b) uncertain
c) strategic
d) typical
Question 8 2..5 points
The longer the time to ________, the greater is the value of a real option.
Question options:
a) market
b) profitability
c) exercise
d) maturity
Question 9 .5 points
Under conditions of uncertainty, cash flow projections are ________.
Question options:
a) simply unreliable
b) fairly certain
c) risk free
