Seeing is believing!

Before you order, simply sign up for a free user account and in seconds you'll be experiencing the best in CFA exam preparation.

Basic Question 3 of 6

Molecular Sciences has a patent for a promising new chemical product, but it's worried about the size of the market opportunity, and it's unsure whether the manufacturing process will meet government regulations regarding toxic chemicals. If the company does begin an effort to commercialize the product, though, it will have the option to give up the project if demand doesn't materialize or if the environmental liability appears too large. This is an example of:

A. Timing options.
B. Abandonment options.
C. Fundamental options.

User Contributed Comments 0

You need to log in first to add your comment.
I used your notes and passed ... highly recommended!
Lauren

Lauren

Learning Outcome Statements

describe types of real options relevant to capital investments

CFA® 2025 Level I Curriculum, Volume 2, Module 5.