Which of the Following Statements Is FALSE

question 20

Multiple Choice

Which of the following statements is FALSE?

• A)Abandonment options can add value to a project because a firm can drop a project if it turns out to be unsuccessful.
• B)Corporate bonds often contain embedded abandonment options: The issuing firm sometimes has the option to convert the bond-that is,to repay it.
• C)An abandonment option is the option to walk away.
• D)An important abandonment option that many people encounter at some point in their lives is the option to abandon their mortgage.

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Definitions:

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.

Competitive Rate

An interest rate, price, or charge that is favorable compared to those offered by competitors.

Residences

Places where individuals live or dwell for a period of time.

Flat Screen Television

A slim television with a flat display technology, such as LCD, LED, or plasma, as opposed to older, bulkier CRT screens.