Assume That the Delta of a Call Option on a fiRm's

question 72

Multiple Choice

Assume that the delta of a call option on a firm's assets is .792.This means that a €50,000 project will increase the value of equity by:

• A)€27,902
• B)€39,600
• C)€43,820
• D)€63,181
• E)€89,600

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Definitions:

Indicator Variable

A binary variable that takes the value 1 to indicate the presence of a particular feature or condition and 0 to indicate its absence.

Odds Ratio

A measure of association between an exposure and an outcome, indicating the odds of an outcome occurring in the presence compared to the absence of the exposure.

Logistic Regression Model

A statistical model that estimates the probability of a binary outcome based on one or more predictor variables.

Logistic Regression Model

A statistical model used to predict a binary outcome (such as yes/no, success/failure) based on one or more predictor variables.