Which of the Following Statements Is FALSE

question 55

Multiple Choice

Which of the following statements is FALSE?

• A)The option price is more sensitive to changes in volatility for at-the-money options than it is for in-the-money options.
• B)A share of stock can be thought of as a put option on the assets of the firm with a strike price equal to the value of debt outstanding.
• C)In the context of corporate finance,equity is at-the-money when a firm is close to bankruptcy.
• D)Because the price of equity is increasing with the volatility of the firm's assets,equity holders benefit from a zero-NPV project that increases the volatility of the firm's assets.

---

Definitions:

Cardiac Muscle

Specialized muscle tissue found only in the heart, responsible for the heart's contraction and the blood's circulation throughout the body.

Limbic System

A complex system of nerves and networks in the brain, involved with instinct and mood control, as well as the processing of emotions and memories.

Control

In experimental contexts, a standard condition against which results are compared, ensuring the experiment measures the effect of the independent variable.

Voltage-Gated

Referring to ion channels that open or close in response to changes in the electrical potential across a cell membrane.