MNG Test Questions And Answers
E - Answer ________ is when both market uncertainty and technical uncertainty are high.
A.
Real options thinking
B.
Market uncertainty
C.
Scouting options
D.
Positioning options
E.
Stepping-stone options
D - Answer Which of the following is NOT considered a real asset?
A.
Finished goods inventories
B.
Information technology
C.
Distribution systems
D.
Patents
E.
Land
C - Answer Which of the following is NOT true about types of flexibilities that an organization
may possess?
A.
Actions a firm takes can create more than one type of flexibility simultaneously.
B.
The option to abandon is when a firm makes choices that enhance its ability to close and restart a
business.
C.
The option to expand is when a firm makes choices that enhance its ability to enhance its
strategy beyond its current boundaries.
D.
Strategic flexibility created by a firm having options can take many forms, not just one.
E.
A firm that builds a plant that is very difficult to increase in capacity is less flexible than this
firm. This is why the option to grow is often attractive to a firm.
D - Answer When the real options that a company confronts are ________, or when the ability
to do real options analysis is widely diffused among competing firms, real options analysis is
________ to be a source of competitive advantage for a firm.
A.
not path dependent; likely
, MNG Test Questions And Answers
B.
flexible; not likely
C.
not flexible; not likely
D.
not path dependent; not likely
E.
path dependent; not likely
D - Answer Which of the following describes the time to maturity for an option?
A.
The longer the time to maturity, the greater is the uncertainty of a real option.
B.
The longer the time to maturity, the higher reward of that option.
C.
The shorter the time to maturity, the greater is the value of a real option.
D.
The longer the time to maturity, the greater is the value of a real option.
E.
The shorter the time to maturity, the greater is the uncertainty of a real option.
E - Answer The ________ of cash flows generated by choosing and implementing a certain
strategy is equal to the sum of those cash flows, discounted by how risky they are.
A.
real option
B.
risk
C.
strategic flexibility
D.
real assets
E.
present value
E - Answer ________ is step six in valuing a real option.
A.
Calculating option value metrics
B.
Describing the real option using financial option parameters
C.
Recognizing the real option
D.
Estimating the value of the option from the Black-Scholes option pricing table
E.
Comparing full present value with option value
E - Answer ________ is when both market uncertainty and technical uncertainty are high.
A.
Real options thinking
B.
Market uncertainty
C.
Scouting options
D.
Positioning options
E.
Stepping-stone options
D - Answer Which of the following is NOT considered a real asset?
A.
Finished goods inventories
B.
Information technology
C.
Distribution systems
D.
Patents
E.
Land
C - Answer Which of the following is NOT true about types of flexibilities that an organization
may possess?
A.
Actions a firm takes can create more than one type of flexibility simultaneously.
B.
The option to abandon is when a firm makes choices that enhance its ability to close and restart a
business.
C.
The option to expand is when a firm makes choices that enhance its ability to enhance its
strategy beyond its current boundaries.
D.
Strategic flexibility created by a firm having options can take many forms, not just one.
E.
A firm that builds a plant that is very difficult to increase in capacity is less flexible than this
firm. This is why the option to grow is often attractive to a firm.
D - Answer When the real options that a company confronts are ________, or when the ability
to do real options analysis is widely diffused among competing firms, real options analysis is
________ to be a source of competitive advantage for a firm.
A.
not path dependent; likely
, MNG Test Questions And Answers
B.
flexible; not likely
C.
not flexible; not likely
D.
not path dependent; not likely
E.
path dependent; not likely
D - Answer Which of the following describes the time to maturity for an option?
A.
The longer the time to maturity, the greater is the uncertainty of a real option.
B.
The longer the time to maturity, the higher reward of that option.
C.
The shorter the time to maturity, the greater is the value of a real option.
D.
The longer the time to maturity, the greater is the value of a real option.
E.
The shorter the time to maturity, the greater is the uncertainty of a real option.
E - Answer The ________ of cash flows generated by choosing and implementing a certain
strategy is equal to the sum of those cash flows, discounted by how risky they are.
A.
real option
B.
risk
C.
strategic flexibility
D.
real assets
E.
present value
E - Answer ________ is step six in valuing a real option.
A.
Calculating option value metrics
B.
Describing the real option using financial option parameters
C.
Recognizing the real option
D.
Estimating the value of the option from the Black-Scholes option pricing table
E.
Comparing full present value with option value
