Chap023 - Chapter 23 Options and Corporate Finance Extensions and Applications Chapter 23 Options and Corporate Finance Extensions and Applications

Chap023 - Chapter 23 Options and Corporate Finance...

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Chapter 23 - Options and Corporate Finance: Extensions and ApplicationsChapter 23Options and Corporate Finance: Extensions and ApplicationsMultiple Choice Questions1. The option to abandon is: A. a real option.B. usually of little value because of the cost associated with abandonment.C. irrelevant in capital budgeting analysis.D. nearly always less relevant the option to expand.E. All of the above.2. An example of a special option is: 3. Executives can not exercise their options for a fixed period of time. This is the: 4. The NPV approach must be: 23-1
Chapter 23 - Options and Corporate Finance: Extensions and Applications5. Options are granted to top corporate executives because: A. executives will make better business decisions in line with benefiting the shareholders.B. executive pay is at risk and linked to firm performance.C. options are tax-efficient and taxed only when they are exercised.D. All of the above.E. None of the above.6. The call option on a dividend paying stock compared to a non-dividend paying stock is: 7. The value of the options awarded executives is much less than face value to the executives because: 8. By rewarding executives with large option positions, corporations: 23-2
Chapter 23 - Options and Corporate Finance: Extensions and Applications

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