Does the APV start with the base-case value of the project? Does the APV method forecast project cash flows and discount them at the WACC for the project? Is the APV method useful when debt is paid down on a fixed schedule?

What is the worth of a call option if the stock price is 0? What is the worth of a call option if the stock price is very very high and much greater than the exercise price?

• 0 ?
• S-PV(EX) ?
• PV(EX)-S ?

1. How can you achieve the same payoff as not being able to short the stock using options and borrowing and lending?
2. What gives the same payoff as investing in a risk-free loan?

1. A ____ option gives its owner the opportunity … price called the _____ price.
2. A ____ option gives its owner the opportunity to sell the stock.
3. Options that can only be exercised at maturity are called ______.

You have a stock AND a put option on that stock:

1. What is the payoff if the stock is below the exercise price?
2. What is the payoff if the stock is above the exercise price?

Given position diagrams that look like hockey sticks, determine which diagram is a Call seller, Call buyer, Put sell or Put buyer.

What’s worth more, an option to buy a portfolio of stocks or a portfolio of options to buy each individual stock?

Which of these is correct?

• Value of put + present value of exercise price = value of call + share price
• Value of put + share price = value of call + present value of exercise price
• Value of put − share price = present value of exercise price − value of call
• Value of put + value of call = share price − present value of exercise price