New Wave Homes Is a Developer of Planned Residential Communities

question 37

Multiple Choice

New Wave Homes is a developer of planned residential communities. It has entered into an option contract with a land owner outside Sydney, NSW. It will pay the land owner $100,000 for the option to buy the land in two years at a price of $20 million. During that time New Wave will evaluate population and real estate trends in Sydney. Their plan is to buy the land if real estate prices in Sydney increase enough that developing the land would be worth more than the $20 million price. The $20 million purchase price resembles:

• A) the premium price of a put option on the land.
• B) the premium price of a call option on the land.
• C) the strike price of a put option on the land.
• D) the strike price of a call option on the land.

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Definitions:

Biopower

Foucault’s term to explain people taking ownership of their bodies and their health.

Health

A state of complete physical, mental, and social well-being, not merely the absence of disease or infirmity.

Low-Income Groups

Populations earning significantly below the median income level, often facing economic hardship and limited access to resources.

Mental Disorders

Health conditions characterized by alterations in thinking, mood, or behavior associated with distress or impaired functioning.