Ima Greedy,the CFO of Financial Saving Techniques Has Been Granted

question 16

Multiple Choice

Ima Greedy,the CFO of Financial Saving Techniques has been granted options on 200,000 shares.The equity is currently trading at £22 a share and the options are at the money.The volatility of the equity has been about .20 on an annual basis over the last several years.The option mature in 3 years and the risk free rate is 4%. Calculate N(d₂) .

• A).5130
• B).5578
• C).6085
• D).7085
• E).7142

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Definitions:

Financial Leverage

Applying borrowed resources to escalate the potential profits of an investment.

EPS

Earnings Per Share, a measure of a company's profitability that divides its net profit by the number of outstanding shares.

ROE

Return on Equity; a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how efficiently a company uses its assets to generate profit.

ROCE

Return on Capital Employed, a financial ratio that measures a company's profitability and the efficiency with which its capital is used.