Real Options: Consider a Lease Agreement Recently Offered by a Car

question 35

Multiple Choice

Real options: Consider a lease agreement recently offered by a car dealership. The agreement gives the customer the right to use a new SUV for three years in exchange for payments of $550 per month. At the end of the lease, the customer can choose to purchase the SUV for $15,000. What sort or option does this resemble?

• A) A put option on the SUV with a strike price of $15,000
• B) A call option on the SUV with a strike price of $15,000
• C) A put option on the SUV with a strike price of $19,800
• D) A call option on the SUV with a strike price of $19,800

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Definitions:

Standard Deviation

A statistical measure that quantifies the variation or dispersion of a set of data points around their mean average.

Fixed-Interval

In the context of psychological reinforcement, it refers to a schedule where rewards are given after a fixed time period has elapsed, assuming a correct response is made.

Random-Interval

A timing schedule in operant conditioning where reinforcements are given at unpredictable intervals.

Variability

The extent to which data points in a statistical distribution or data set diverge from the average value.