Real Options

Occur when managers can influence the size and risk of a project's cash flows by taking different actions during the project's life.  They are referred to as real options because they deal with real assets as opposed to financial assets.  They are also called managerial options because they give opportunities to managers to respond to changing market conditions.  Sometimes they are called strategic options because they often deal with strategic issues.  Finally, they are also called embedded options because they are a part of another project.
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