Which of the Following Statements Is FALSE

question 55

Multiple Choice

Which of the following statements is FALSE?

• A)The option price is more sensitive to changes in volatility for at-the-money options than it is for in-the-money options.
• B)A share of stock can be thought of as a put option on the assets of the firm with a strike price equal to the value of debt outstanding.
• C)In the context of corporate finance,equity is at-the-money when a firm is close to bankruptcy.
• D)Because the price of equity is increasing with the volatility of the firm's assets,equity holders benefit from a zero-NPV project that increases the volatility of the firm's assets.

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Definitions:

Motivational Properties

Attributes of objects, events, or states that can induce an organism to engage in a particular behavior towards achieving a certain goal.

Novelty

Novelty involves the quality of being new, original, or unusual, often sparking interest or curiosity.

Uncertainty

The state of being unsure or having doubts, often involving a situation that is unpredictable or has unknown outcomes.

Arousal

A physiological and psychological state of being awake or reactive to stimuli, often involving increased heart rate and alertness.