Question: 1 . What is an option? 2 . How do the following factors affect the call price? Assuming the value of each of the following

1 .

What is an option?

2 .

How do the following factors affect the call price? Assuming the value of each of the following increases, what would be the effect on the value of the call

(

increase or decrease

) ?

Stock price

Exercise price

Time to maturity

Volatility

3 .

How does an option

s intrinsic value differ from its time value?

4 .

Is the MRAM growth option comparable to a financial option? If so

,

how?

5 .

How much would the MRAM growth option have to be worth to make it worthwhile to invest in RamSync?

6 .

With the data as given, what is the value of the MRAM growth option?

7 .

Assuming you believe volatility can affect the value of the call option, what would be the value of the MRAM growth option if the expected volatility were

50 % ?

How about

75 % ?

In each case, assume all other values remain the unchanged.

Value of Call Option with

50 %

volatility

Value of Call Option with

75 %

volatility

8 .

What would be the value of the MRAM growth option if the expected value of the MRAM market was $

300

million? $

120

million? $

100

million? In each case, assume all other values remain the unchanged.

Value of Call if value of MRAM market

=

300

Value of Call if value of MRAM market

=

120

Value of Call if value of MRAM market

=

100

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