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(1) An option or choice in the management of real (as opposed to financial) assets or operations, such as the option to accelerate or defer capital expenditures, to change process inputs or outputs, to build or abandon capacity or to alter the nature or to change the scale of a production process. The substantial literature on real options has revolutionized the capital budgeting and real investment process. (2) An option on a physical (as opposed to a financial) asset, such as real property, commodities, etc.
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