Which of the Following Statements Is FALSE

question 33

Multiple Choice

Which of the following statements is FALSE?

• A)An alternative to using the Black-Scholes formula is to compute the value of growth options using risk-neutral probabilities.
• B)Future growth options are not only important to firm value,but can also be important in the value of an individual project.
• C)While the Black-Scholes formula values American options,most growth options cannot be exercised at any time.
• D)Out-of-the-money calls are riskier than in-the-money calls,and because most growth options are likely to be out-of-the-money,the growth component of firm value is likely to be riskier than the ongoing assets of the firm.

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Definitions:

Presidential

Pertaining to the president of a country or an organization, often relating to the duties, powers, or period of office of such a position.

Congressional

Relating to a formal legislative body, often referred to in the context of the United States Congress, which is responsible for making national laws.

Political Action Committee

An organization that collects political donations from its members and uses them to fund campaigns for or against candidates, legislation, or initiatives.

PAC

Political Action Committee, an organization that collects political donations then donates them to campaigns that support their aims.