Question 1

On the notion of embedded options, which of the following is/are true?

Accepted Answer

A) If virtually all projects have embedded options, ignoring options is likely to lead to serious
Undervalution. 
B) There are two possible outcomes for virtually every business idea. 
C) Virtually every business has both the option to abandon and the option to expand. 
D) All of the above. 
E) Pundits rely solely on net present value approach for capital budgeting decisions. 
A) If virtually all projects have embedded options, ignoring options is likely to lead to serious
Undervalution. 
B) There are two possible outcomes for virtually every business idea. 
C) Virtually every business has both the option to abandon and the option to expand. 
D) All of the above. 
E) Pundits rely solely on net present value approach for capital budgeting decisions.

Question 2

What are the u, the up state multiplier, and d, the down state multiplier, if there are monthly intervals and the standard deviation is .38?

Accepted Answer

A) 1.1159; .8961 
B) .0317; 31.5789 
C) .0317; .9683 
D) .2193; .7807 
E) None of the above 
A) 1.1159; .8961 
B) .0317; 31.5789 
C) .0317; .9683 
D) .2193; .7807 
E) None of the above

On the notion of embedded options, which of the following is/are true?

What are the u, the up state multiplier, and d, the down state multiplier, if there are monthly intervals and the standard deviation is .38?

Introduction to Corporate Finance

Corporate Governance

Financial Statement Analysis

Discounted Cash Flow Valuation

Bond, Equity and Firm Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

Factor Models and the Arbitrage Pricing Theory

Risk, Cost of Capital and Capital Budgeting

Efficient Capital Markets and Behavioural Finance

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Equity Financing

Debt Financing

Leasing

Options and Corporate Finance

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Short-Term Capital Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters

Exam 23: Options and Corporate Finance: Extensions and Applications

On the notion of embedded options, which of the following is/are true?

What are the u, the up state multiplier, and d, the down state multiplier, if there are monthly intervals and the standard deviation is .38?

Introduction to Corporate Finance

Corporate Governance

Financial Statement Analysis

Discounted Cash Flow Valuation

Bond, Equity and Firm Valuation

Net Present Value and Other Investment Rules

Making Capital Investment Decisions

Risk Analysis, Real Options and Capital Budgeting

Risk and Return: Lessons From Market History

Risk and Return: the Capital Asset Pricing Model

Factor Models and the Arbitrage Pricing Theory

Risk, Cost of Capital and Capital Budgeting

Efficient Capital Markets and Behavioural Finance

Long-Term Financing: an Introduction

Capital Structure: Basic Concepts

Capital Structure: Limits to the Use of Debt

Valuation and Capital Budgeting for the Levered Firm

Dividends and Other Payouts

Equity Financing

Debt Financing

Leasing

Options and Corporate Finance

Warrants and Convertibles

Financial Risk Management With Derivatives

Short-Term Finance and Planning

Short-Term Capital Management

Mergers and Acquisitions

Financial Distress

International Corporate Finance

Filters