Real options (See Chapter 20 of the Vernimmen) Classic methods of investment analysis disregard the flexibility managers have even after starting the project. They can abandon it, expand it, etc. Real options measure this flexibility. Real options give the right, but not the obligation, to change an investment project and in particular, when new information on its prospective returns becomes available. Real options include (non-exhaustive list): option to launch a new project, option to develop or extend the business, option to reduce or contract business, option to postpone a project, option to defer progress of the project, option to abandon. A real option is often called a hidden option, because many investors do not explicitly admit its existence. Real options (See Chapter 20 of the Vernimmen) Classic methods of investment analysis disregard the flexibility managers have even after starting the project. They can abandon it, expand it, etc. Real options measure this flexibility. Real options give the right, but not the obligation, to change an investment project and in particular, when new information on its prospective returns becomes available. Real options include (non-exhaustive list): option to launch a new project, option to develop or extend the business, option to reduce or contract business, option to postpone a project, option to defer progress of the project, option to abandon. A real option is often called a hidden option, because many investors do not explicitly admit its existence. See all terms in the dictionary of finance To know more about it, look at what we have already written on this subject :

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Definitions of terms begining with the same letter as "Real options" :

R&D RCF RNAV ROCE ROE Range note Ratchet effect Rate of discount Rate of return Rate tunnel Rating Rating agency Rating outlook Raw material prices risk Re-rating Real dilution Real interest rate Real options Realised rate Recapitalisation Receivables Recommended offer Recoverable value Recurrent items Recurring items Redemption

Reference rate Registered bond Regulatory changes Regulatory risk Relative value ratio Rendez-vous clause Repayment by equal instalments Repayment by tranches (or series) Repayment in fine Replacement cost Replicating portfolio Repo, repurchase agreement Representations and warranties, Reps & warranties Reps & warranties Repurchase agreement Required rate of return Requirements in working capital Research and development costs, R&D Reserved capital increase Residual pool Residual value Resistance level Restated net asset value, RNAV Restrictive covenant Restructuring charges Restructuring provisions

Retail investor Retail public offering Retained Cash Flow Retained earnings Return Return on capital employed, ROCE Return on equity, ROE Return on investment Revenues Reverse flex Reverse repo Revolving credit Right of approval Right of first refusal Rights issue Risk Risk of a fraud Risk of default Risk of illiquidity Risk premium Risk-free assets Risk-free rate Risk/return ratio Roadshow Rule 144A