Which of the following statements is​ FALSE?       A. You invest today only when the NPV of investing today exceeds the value of the option of​ waiting, which from option pricing theory we know to be always positive.   B. When you do not have the option to​ wait, it is optimal to invest in any positive−NPV project.   C. One way to see why you sometimes choose not to invest in a positive−NPV project is to think about the decision of when to invest as a choice between two mutually exclusive​ projects: (1) invest today or​ (2) wait.   D. When you have the option of deciding when to​ invest, it is usually optimal to invest only when the NPV is positive but close to zero.

Which of the below statements is false about real options?  A. Real options increase firm value B.Investing in a project can be priced as an American call option C.Abandoning a project can be priced as an American put option D.Growth options have no impact on the market value of the firm

Consider the following statement: “In contexts of increased uncertainty, the usefulness of real options when valuing an investment opportunity increases”. Do you agree with this statement? Explain your answer.

In our study of Real Options, we learned about the many benifits of Real Options. Of the below, which is FALSE? O A. Given the option to delay, an investment that currently has a negative NPV can have a positive value. O B. As the level of uncertainty increases, the benefit of waiting is diminished. OC. In a real option analysis, the dividends correspond to any value from the investment that we give up by waiting. O D. By delaying an investment, we can base our decision on new information.

“Even in an efficient market, it is still valid to seek out a ‘favourable’ rate of return from an equity investment. In an efficient market, one security is as good as any other.”  Do you agree? Why?

3) The optimal risky portfolio has a Sharpe ratio of 0.8. However, one of your clients does not want to hold any oil and gas stocks in his portfolio. How would the Sharpe ratio of his optimal risky portfolio change? Please explain your answer for full credit. Focus MacBook Pro A

As a call option is an option to buy and a put option an option to sell, the opposite position to buying an option to buy is buying an option to sell. Therefore, any factor that increases the value of a call option will decrease the value of a put option written on the same asset. Identify whether it is TRUE or FALSE. Why? Give an explanation.

No risk, no reward. Most people intuitively understand that they have to bear some risk to achieve an acceptable return on their investment portfolios. But how much risk is right for you? If your investments turn sour, you may put at jeopardy your ability to retire, to pay for your kid's college education, or to weather an unexpected need for cash. These worst-case scenarios focus our attention on how to manage our exposure to uncertainty. Assessing and quantifying-risk aversion is, to put it mildly, difficult. It requires confronting at least these two big questions. First, how much investment risk can you afford to take? If you have steady high-paying job, for example, you have greater ability to withstand investment losses. Conversely, if you are close to retirement, you have less ability to adjust your lifestyle in response to bad investment outcomes. Second, you need to think about your personality and decide how much risk you can tolerate. At what point will you be unable to…

Didn't get answer

I have been working on the question below and I'm stuck on how to finish it up.  I have provided what I've done so far.  Is what I've done so far correct?  And how do I finish up the problem? Here is the question: Suppose that C is the price of a European call option to purchase a security whose present price is S. Show that if C>S then there is an opportunity for arbitrage (i.e. risk-less profit). You may assume the interest rate is r=0 so that the present value calculations are unnecessary. My work so far: There is an opportunity for arbitrage if we can create a portfolio that initially (time t=0) generates a zero net cash flow or a cash inflow, but still produce a positive or zero cash inflow at the time of expiration. Assume we are going to short sell one call option C, and buy one stock S. Consider the cash flows at time t=0.Cash flow of selling one call option: +CCash flow of buying one stock: -STherefore, since C>S, we have an initial cash inflow of C-S>0. We will now…