Exit Option


Exit Option
An embedded option within a project that allows the firm abort their operations at little or no cost. An exit option can typically only be exercised after key developments have occurred within the project. Like any other option, this instrument must be purchased at a cost which factors into the capital budgeting decision, but its value is not determined by the price of an underlying asset.

For example, if company XYZ decides to expand their number of operating factories by 10 over five years, an exit option would allow them to abort this operation despite contractual obligations with suppliers and land developers. If, after 2 years, expansion remains a good idea, XYZ can continue to do so. However, if economic conditions have changed, the exit option provides the opportunity to stop further efforts at no cost.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Exit-Option — Exit und Voice (dt. etwa Abwanderung und Widerspruch ) ist ein soziologisches Konzept von Albert Otto Hirschman, das zwei grundlegende Reaktionsmöglichkeiten auf institutionellen Rückgang unterscheidet: „Exit“ oder „Voice“. Das Grundkonzept… …   Deutsch Wikipedia

  • Exit und Voice — (dt. etwa Abwanderung und Widerspruch) ist ein soziologisches Konzept von Albert Otto Hirschman, das zwei grundlegende Reaktionsmöglichkeiten auf Leistungsabfall von Organisationen charakterisiert: „Exit“ oder „Voice“. In der wirtschafts , sozial …   Deutsch Wikipedia

  • Exit (Soziologie) — Exit und Voice (dt. etwa Abwanderung und Widerspruch ) ist ein soziologisches Konzept von Albert Otto Hirschman, das zwei grundlegende Reaktionsmöglichkeiten auf institutionellen Rückgang unterscheidet: „Exit“ oder „Voice“. Das Grundkonzept… …   Deutsch Wikipedia

  • EXIT (festival) — infobox music festival music festival name = EXIT festival location = flagicon|Serbia Novi Sad, Serbia years active= 2000 present founders = Dušan Kovačević and Bojan Bošković dates = Four days, starting on the first Thursday of July genre = Rock …   Wikipedia

  • Exit number — On a road with distance based exit numbering, the exit number (shown here on a gore sign) matches a nearby mile or kilometer marker …   Wikipedia

  • EXIT project — Infobox musical artist Name = EXIT project Background = group or band Origin = flagicon|Russia Moscow, Russia Genre = Progressive rock, Electronic music, Art rock, Experimental music, Instrumental, Easy listening, Electronica, Jazz fusion Years… …   Wikipedia

  • Employee stock option — An employee stock option is a call option on the common stock of a company, issued as a form of non cash compensation. Restrictions on the option (such as vesting and limited transferability) attempt to align the holder s interest with those of… …   Wikipedia

  • Abandonment Option — A clause granting parties the option of withdrawing from the contract before the fulfillment or completion of all contractual duties. This clause adds value by giving the parties the ability to end the obligation if it is unprofitable. A… …   Investment dictionary

  • Creative real estate investing — is a term used to describe non traditional methods of buying and selling real estate. Typically, a buyer will secure financing from a lending institution and pay for the full amount of the purchase price with a combination of the borrowed funds… …   Wikipedia

  • Brady Bonds — are dollar denominated bonds, issued mostly by Latin American countries in the 1980s, named after U.S. Treasury Secretary Nicholas Brady.HistoryBrady bonds were created in March 1989 in order to convert bonds issued by mostly Latin American… …   Wikipedia


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.