Exercise an abandonment option


Read the given statements:

Critics say that because real options don't expire according to contract as financial options do, managers can't be counted on to pull the plug on a project (exercise an abandonment option) when they should. Also, projects assume lives of their own, and may not be easy to kill.

Do you agree with the above statements? Explain why yes or why no. To support your answer provide some examples and make sure to draw upon the materials from your textbooks.

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Finance Basics: Exercise an abandonment option
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