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Chapter 8
3.3 Using the BSOP model to value real options
The BSOP model is well suited to simple real options i.e. those with a single source
of uncertainty and a single decision date.
In the P4 syllabus, calculations will be restricted to options to delay and expand (call
options) and options to withdraw (put options).
Calculations relating to options to redeploy are not examinable.
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