Chapter Questions
How does using different scenarios differ from simple cash flow discounting?
In a simplified form, can the Monte Carlo method be implemented without a computer?
What is interesting in the certainty equivalent method?
What does the theory of options contribute to the valuing of an investment?
Is the theory of options opposed to the theory of efficient markets?
Can a project that contains significant real options be valued properly by the NPV criterion? By the construction of scenarios? By the Monte Carlo method? By the certainty equivalent method?
Provide an example of a project where there is an option to abandon.
Provide an example of a project where there is an option to expand.
In practice, what is the most serious problem raised by real options?
What makes the contribution of real options attractive for operations managers?
How do you interpret the acquisition by EDF of plots of land adjacent to British Energy nuclear plants a few months before the UK privatised this company (knowing that this land was necessary for the modernisation of the plants)?