32. Firm can make an abandonment option more realistic by A) Investing as little

Question

32. Firm can make an abandonment option more realistic by A) Investing as little as possible in the project initially B) Leasing rather than buying the production facility C) Acquiring insurance to protect failure in the event of abandonment D) Not disclosing any intention of abandoning a project to the local government 33. Which of the following is an advantage of interest rate swaps? A) Swaps lower interest-rate costs more cheaply B) Swaps are very liquid C) Swaps are short term D) All of the above 34. Futures markets have been successful and have grown rapidly because A) Of standardizationof the futures contract B) Of the ability to buy or sell the contract up to the maturity C) Of the reduced risk of default from all parties involved D) All of the above 35. Which of the following is a call option hidden in capital investments? A) The ability to abandon a project B) The ability to delay making an investment C) Loan guarantees D) Insurance policies 36. Buying an October call option with an exercise price of $50 for $8 and simultaneoudy selling an October call option with an exercise price of $60 for $2, you are A) Bullish and taking a high risk B) Bullish and conservative C) Bearish and taking a high risk D) Bearish and conservative 37. Because most growth options are likely to bethe growth component of firm value is likely to be than the on-going assets of the firm. A) Out-of-the-money, riskier B) In-the-money; riskier C) Out-of-the-money, more certain D) In-the-money, more certain

Explanation / Answer

We are supposed to solve 4 questions when multiple posted
32)It is option B , since this will favour them more than without option
33)Option D all the options are the advantage for interest rate swaps
34)Option D all the options are the advantage for future markets
35)option A

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