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

question 8

Multiple Choice

The delta of a call option on a firm's assets is 0.727.This means that a $195,000 project will increase the value of equity by:

• A)$141,765.
• B)$180,219.
• C)$211,481.
• D)$264,909.
• E)$268,226.

---

Definitions:

Precipitation

Any type of water, whether in liquid or solid state, that descends from the atmosphere, encompassing rain, snow, sleet, and hail.

Significance Level

The threshold below which a null hypothesis is rejected in statistical testing, typically denoted as alpha (α).

Income

The amount of money received by an individual or group over a specific time period, usually derived from work, investments, or business ventures.

Behaviorist

A proponent of behaviorism, a theory in psychology that emphasizes the importance of observable actions and behaviors over internal processes.