7. introduction to real options consider the following statement about real options: certain real options allow companies to change capacity output in response to changing market conditions. true or false: the preceding statement is correct. false true which type of real option allows the output and/or inputs in the production process to be altered, depending on how market conditions change during a project’s life? timing option expansion option abandonment option flexibility option consider the following example: clemens inc. is considering a $100 million investment in a new line of soft drinks. however, $100 million is a huge investment for clemens; if things turn bad, it could wipe out the company. a few senior managers have suggested a smaller investment of $20 million to see if the market is as strong as they hope it is. if demand is strong and the opportunity is still available, clemens will increase its investment at a later date. this example describes a real option to .