Which One of the Following Statements Is True

question 376

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.

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Definitions:

Majority Vote

A decision-making process where the option that receives more than half of the votes is chosen.

Business Decisions

Choices made by individuals or groups in the context of business operations that affect the organization's strategy and performance.

Federal Jurisdictional Purposes

The purposes for which federal law or courts have the authority to apply, hear, and decide on legal matters or disputes.

Citizenship

The status of being a recognized member of a state, with rights and duties.