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1. Which of the following is an example of a growth option?

a) Expansion of an existing product line

b) Temporary suspension of operations

c) Wait to start a project until more information is available

d) Contraction of operations

e) Alteration of operations depending on conditions

2. Nowel Inc. stock is currently priced at $42. The present value of the strike price of a call option on this stock is $44. Probability one, as calculated by the Black Scholes option pricing model is .6541; probability 2 is .3722. The value of this option as calculated by Black-Scholes is

A) $(2.00).

B) $11.10.

C) $2.000.

D) $10.71.

Financial Management, Finance

  • Category:- Financial Management
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