Changes in a Company's Capital Expenditures or Fixed Asset Sales

question 78

Multiple Choice

Changes in a company's capital expenditures or fixed asset sales over time must

• A)be carefully analyzed for changes in the company's strategy.
• B)be indicative of changes in the company's strategy.
• C)indicate incompetent management.
• D)raise the company's risk of default on its debt.

---

Definitions:

Present Value

The current value of a future sum of money or stream of cash flows, discounted at a specified rate of return.

At-the-money

A term used in options trading to describe a situation where the option's strike price is identical to the current market price of the underlying asset.

Call Option

A financial contract that gives the buyer the right but not the obligation to buy a stock, bond, commodity, or other asset at a specified price within a specific time period.

Dynamic Hedging

A strategy of managing risk that involves adjusting the number of derivatives used as financial instruments in proportion to the changing value of the underlying asset.