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What is a real option? What is a financial option? What is the single most important characteristic of an option?

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Mini Case a & c Pages 614-615

a. What is a real option? What is a financial option? What is the single most important characteristic of an option?

c. Consider Tropical Sweets' call option with a $25 strike price. The following table contains historical values for this option at different stock prices:

Stock Price Call Option Price
$25 $3.00
30 7.50
35 12.00
40 16.50
45 21.00
50 25.50

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a. What is a real option? What is a financial option? What is the single most important characteristic of an option?

An option is a contract that gives its holder the right to sell (or buy) an asset at some predetermined price within a specified period of time. The most important characteristic of an ...

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  • MBA, California State University, Sacramento
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