Which of the following statements is FALSE?
A)The option price is more sensitive to changes in volatility for at-the-money options than it is for in-the-money options.
B)A share of stock can be thought of as a put option on the assets of the firm with a strike price equal to the value of debt outstanding.
C)In the context of corporate finance,equity is at-the-money when a firm is close to bankruptcy.
D)Because the price of equity is increasing with the volatility of the firm's assets,equity holders benefit from a zero-NPV project that increases the volatility of the firm's assets.

Question

Quizplus · Accepted Answer

The Answer of Which of the following statements is FALSE?
A)The option price is more sensitive to changes in volatility for at-the-money options than it is for in-the-money options.
B)A share of stock can be thought of as a put option on the assets of the firm with a strike price equal to the value of debt outstanding.
C)In the context of corporate finance,equity is at-the-money when a firm is close to bankruptcy.
D)Because the price of equity is increasing with the volatility of the firm's assets,equity holders benefit from a zero-NPV project that increases the volatility of the firm's assets.

Which of the Following Statements Is FALSE