The value of real option calculated using the volatility of revenue ________ the true value of the
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Question:
The value of real option calculated using the volatility of revenue ________ the true value of the real option in the presence of fixed cost, because the volatility of revenue is _________ compared to the volatility of profit.
Consider the following data on a European call option.
S 30
X 25
r 0.02
T 0.75
sigma 0.20
Calculate the delta of the option. Round to two decimal places.
a. 0.19
b. 0.08
c. 0.89
d. 0.95
Expert Answer:
The value of real option calculated using the volatility of revenue overestimates the true va... View the full answer
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