The Shareholders of a Firm Will Benefit the Most from a Positive

question 52

Multiple Choice

The shareholders of a firm will benefit the most from a positive net present value project when the delta of the call option on the firm's assets is:

• A) equal to one.
• B) between zero and one.
• C) equal to zero.
• D) between zero and minus one.
• E) equal to minus one.

---

Definitions:

Commercial Substance

A concept that an economic transaction has a significant impact on the future cash flows of a company, justifying its recognition.

Plant Assets

Long-term tangible assets, such as buildings, machinery, and equipment, used in the operation of a business and not intended for resale.

Exchanges

Transactions where goods, services, or assets are traded between two parties without the primary use of money, also can refer to platforms that facilitate these trades.

Extraordinary Repairs

Significant repairs that extend the useful life of an asset far beyond the current accounting period, often involving major overhaul or reconstruction.