Question completion Status .call-put .strangle Question 7 the absolute return fr

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Question completion Status .call-put .strangle Question 7 the absolute return from a transaction is: The ratio of total cash received in the transaction to the total cash Invested in the transaction. The difference between the total cash received in the transaction and the total cash invested in the transaction. equal to the leverage required by the transaction equal to the free cash flow to equity Question 8 The _ value is the value the option would have if it expired now. absolute actual intrinsic present Question 9 A projects free flow to equity shows the: maximum debt that the firm can afford expected amount of additional cash the firm will have available pay divdends or repurchase stock year amount of leverage that the firm can afford. risk that the firm has assumed tion 10 A _ option allows the owner of the right to sell a specific asset at a specific price within specific period of time.

Explanation / Answer

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The correct answer is as follows:

7. the ratio of total cash received in the transaction to the total cash invested in the transaction

Explanation: The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset - usually a stock or a mutual fund - achieves over a given period of time.

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8. Intrinsic Value

Explanation: Intrinsic Value - The value of an option if it were to expire immediately with the underlying stock at its current price; the amount by which an option is in-the-money. For call options, this is the difference between the stock price and the striking price, if that difference is a positive number, or zero otherwise. For put options it is the difference between the striking price and the stock price, if that difference is positive, and zero otherwise.

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9. expected amount of additional cash the firm will have available to pay dividends or repurchase stocks this year.

Explanation: This is a measure of how much cash can be paid to the equity shareholders of the company after all expenses, reinvestment and debt repayment.

Calculated as: FCFE = Net Income - Net Capital Expenditure - Change in Net Working Capital + New Debt - Debt Repayment

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