Quiz Ch 22 – T/F Applicability of Binomial Method for Abandonment Options
Principles of Corporate Finance
Brealey, Myers, and Allen
13th Edition
True or false: Various abandonment options are assessed using the binomial method.
True or false: Various abandonment options are assessed using the binomial method.
True or false: The Adjusted Present Value (APV) of a project is determined by adding the NPV (Net Present Value) without the abandonment option to the value of the abandonment option.
True or false: The expansion option falls under the category of financial options.
True or false: Framing the act of waiting as a distinctive form of real option.
True or false: In the event of an acquisition failure, the target firm has the option to seek compensation from the acquiring firm, serving as payment for a specific type of real call option.
True or false: The essential investment is commonly referred to as the exercise price in the realm of real options.
True or false: Adding the NPV (Net Present Value) without the expansion option to the value of the expansion option is equals to the APV (Adjusted Present Value).
True or false: It is possible to buy a futures contract for any currency.
True or false: The Canadian dollar is trading at a forward premium with a spot rate of $1 = C$1.02 and a 3-month forward rate of $1 = C$1.03.
True or false: To mitigate the risk of yen appreciation, a U.S. importer of Japanese products should consider selling Japanese yen forward.