Which of the Following Is True of the Brennan-Schwartz Method

question 10

Multiple Choice

Which of the following is true of the Brennan-Schwartz method for valuing mines?

• A)It requires the observation of the market price of an option to purchase the mineral being mined.
• B)The inputs used in the valuation are the current market price of the mineral,the historical price of the mineral,and the risk-free rate of interest.
• C)The inputs used in the valuation are the current market price of the mineral,the historical price of the mineral,and the market risk premium.
• D)It assumes that the future price movements of the underlying asset follow a binomial process.