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

question 59

Multiple Choice

The delta of a call option on a firm's assets is 0.767. This means that a $50,000 project will increase the value of equity by:

• A)$21,760.
• B)$25,336.
• C)$38,350.
• D)$54,627.
• E)$65,189.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been deducted from revenues.

FASB

The Financial Accounting Standards Board, an independent organization responsible for establishing and improving financial accounting and reporting standards in the United States.

Simultaneous Financing

The process of arranging for multiple sources of finance at the same time, often for complex deals or projects.

Investing Activities

Transactions involving the acquisition or disposal of long-term assets and other investments not considered cash equivalents.