Which option is NOT listed as a real option in decision making?

• A. Option to follow on
• B. Option to abandon
• C. Option to delay
• D. Option to invest

Answer: (D)

Real options capture the flexibility to respond to uncertainty in how a project unfolds. The classic options you can exercise are to delay decisions until more information is available, to expand or follow on if results look favorable, and to abandon the project to cut losses. The option to invest, in isolation, isn’t a separate real option in this framework because the initial investment is the trigger, not an optional action you hold after the fact. The real option lies in what you can do next—delay, expand/follow on, or abandon—rather than in the act of investing itself. That’s why the option to invest isn’t listed as a standalone real option, while the others are.