Gen Combo Looseleaf Principles Of Corporate Finance With Connect Access Card
13th Edition
ISBN: 9781260695991
Author: Richard A Brealey
Publisher: McGraw-Hill Education
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Question
Chapter 32, Problem 8PS
Summary Introduction
To determine: The kind of option is the carried interest.
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Why must real options have positive value?
(Select all the choices that apply.)
A.
Having the real option but not the obligation to act is valuable.
B.
Real options must have positive value because they can always be sold to recover the initial investment.
C.
Real options must have positive value because they are only exercised when doing so would increase the value of the investment.
D.
If exercising the real option would reduce value, managers can allow the option to go unexercised.
What is the advantage and disadvantage of paying your employees stock option?
Explain how the possible profit and loss possibilities arise for an individual who invests in a:
a.
A Call Option
i. Be sure to explain what a Call Option is.
ii. Be sure to incorporate the cost of the Call Option in your analysis.
b. A Put Option
i. Be sure to explain what a Put Option is.
ii. Be sure to incorporate the cost of the Put Option in your analysis.
Chapter 32 Solutions
Gen Combo Looseleaf Principles Of Corporate Finance With Connect Access Card
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