A local city government has awarded a contract to sequentially build five new elementary schools over...

Transcribed Image Text:

A local city government has awarded a contract to sequentially build five new elementary schools over the next 10 years. The price for each school has been spelled out in the contract, but at the beginning of each year the city can cancel the order for the remaining schools. The city government is concerned that if the population of the town does not grow as expected it may not need all of the schools. What type of financial option does the option to cancel the order resemble? O Selling a call option on the value of the new schools O Selling a put option on the value of the new schools O Owning a call option on the value of the new schools O Owning a put option on the value of the new schools Save for Later SHOUT 19 80 MacBook Air Attempts: 0 of 1 used Submit Answer EPIC 22 6.8 7.3 7.3 A local city government has awarded a contract to sequentially build five new elementary schools over the next 10 years. The price for each school has been spelled out in the contract, but at the beginning of each year the city can cancel the order for the remaining schools. The city government is concerned that if the population of the town does not grow as expected it may not need all of the schools. What type of financial option does the option to cancel the order resemble? O Selling a call option on the value of the new schools O Selling a put option on the value of the new schools O Owning a call option on the value of the new schools O Owning a put option on the value of the new schools Save for Later SHOUT 19 80 MacBook Air Attempts: 0 of 1 used Submit Answer EPIC 22 6.8 7.3 7.3