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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.

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I just wanted to share the good news that I passed CFA Level I!!! Thank you for your help - I think the online question bank helped cut the clutter and made a positive difference.
Edward Liu

Edward Liu

Learning Outcome Statements

describe types of real options relevant to capital investments

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