Growth option
Growth option (hereinafter, the Option) is an opportunity to make other potentially profitable investments that is created by an investment and would not otherwise be possible. The possible Options include options to expand output, to enter a new geographical market, and to introduce complementary products or successive generations of products.
Definitions
According to Financial Management Theory and Practice by Eugene F. Brigham and Michael C. Ehrhardt (13th edition),
- Growth option. Occurs if an investment creates the opportunity to make other potentially profitable investments that would not otherwise be possible, including options to expand output, to enter a new geographical market, and to introduce complementary products or successive generations of products.
According to Fundamentals of Financial Management by Eugene F. Brigham and Joel F. Houston (15th edition),
- Growth option (expansion option). If an investment creates the opportunity to make other potentially profitable investments that would not otherwise be possible, then the investment contains a growth (expansion) option.
Related concepts
- Financial management. A combination of enterprise efforts undertaken in order to procure and utilize monetary resources of the enterprise.
