A Share of Stock Is a ________ Option on the Value

question 40

Multiple Choice

A share of stock is a ________ option on the value of assets of the firm with a strike price equal to ________.

• A)put option,face value of debt
• B)call option,market value of equity
• C)call option,face value of debt
• D)put option,market value of equity
• E)put option,market value of debt

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Definitions:

Personal Disposable Income

The amount of money that individuals have available for spending and saving after income taxes have been accounted for.

Manufacturing Output

The total value or volume of goods and products produced within a manufacturing sector in a specific period.

Operating Leverage

The degree to which a firm or project can increase operating income by increasing revenue, reflecting fixed versus variable costs.

Profits

The financial gain realized when the revenues generated from business operations exceed the expenses, taxes, and costs incurred.