Which One of the Following Statements Is True

question 39

Multiple Choice

Which one of the following statements is true?

• A) Common stock acts like a call option on the assets of a levered firm.
• B) Preferred stock is similar to a put option.
• C) Employee stock options are similar to puts on the assets of a firm.
• D) The deposit you pay to reserve a banquet hall for a particular date is a put option.
• E) The option to abandon a project once it has commenced has no value.

---

Definitions:

Control Group

In an experiment, the group that is not exposed to the treatment and is used as a benchmark to measure how the other tested subjects do.

Independent Variable

The variable in an experiment that is manipulated or changed in order to test its effects on a dependent variable.

Dependent Variable

A variable in an experiment that is expected to change in response to changes in the independent variable.

Quasi-experimental

A research design that attempts to establish cause-and-effect relationships but lacks random assignment of participants to control or experimental groups.