The delta of a call option on a firm's assets is 0.767. This means that a $50,000 project
will increase the value of equity by:
You observe that the inflation rate in the United States is 3.5 percent per year and that
T-bills currently yield 3.8 percent annually. What do you estimate the inflation rate to be
in Australia, if short-term Australian government securities yield 4.5 percent per year?
A. 4.17 percent
B. 4.20 percent
C. 4.24 percent
D. 4.27 percent
E. 4.30 percent
Which one of the following statements concerning option payoffs is correct?
A. The buyer of a call profits when the exercise price exceeds the market price.
B. The buyer of a call profits when the strike price exceeds the exercise price.
C. A put will only be exercised if both the seller and the buyer can profit.
D. Both the buyer and the seller profit when a call is exercised.
E. The seller of a put incurs a loss when a put is exercised.
The Blue Star has sales of $387,000, costs of goods sold of $259,000, average accounts
receivable of $9,800, and average accounts payable of $12,600. How long does it take
for the firm's credit customers to pay for their purchases?