Define a real option, What is the difference between a loss

Define a real option

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Reference no: EM132660348

Problem 1: What is the difference between a loss arising from the unavailability of a website and the lost profits that are incurred when that website is disabled?

Problem 2: Define a real option. Why is there any value attributed to a real option?

Avatar was Robbed! Help! The Big Four Accounting Firms, FASB, and large U.S. corporations have a presence in Second Life. The Second Life Community consists of avatars and islands that are owned by organizations and individuals. A virtual market-based economy exists on Second Life. Assume that your avatar has been given $2,000 Linden dollars by one of the Big Four Accounting Firms as an incentive to attend a recruiting seminar. Your avatar flies to the seminar site. As you walk past another avatar in front of the meeting site, you notice your avatar blinks on the screen several times. Your avatar attends the meeting with a number of other student avatars, and you are pleased with the presentation. After the presentation, you want to buy a new suit and tie for your avatar. You notice the $2,000 in Linden dollars is missing. You think your avatar was robbed by the avatar that walked past you on the way to the meeting. Write up a report of the crime for local law enforcement in your community.

Reference no: EM132660348

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