The Delta of a Call Option on a fiRm's Assets

question 397

Multiple Choice

The delta of a call option on a firm's assets is .804. This means that a $60,000 project will increase the value of equity by:

• A) $11,760.
• B) $21,336.
• C) $48,240.
• D) $74,627.
• E) $108,240.

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Definitions:

General Partner

In a partnership, a party who assumes full liability for the partnership's debts and responsibilities.

Limited Partner

A type of investor in a partnership who has limited liability and is not involved in the day-to-day management of the business.

Profits

The financial gain obtained after subtracting all expenses, costs, and taxes from revenue.

Low-profit Limited Liability Companies

Business entities that blend nonprofit and for-profit elements, focusing on social goals while being able to generate profit.