1. (3 points) Three months ago, Toy Town introduced a new toy for preschool children. The store expected this toy to be an instant success and a fast-moving item. To their surprise, children have no interest in this toy, so sales have been bad. Which one of the following options should Toy Town consider with respect to this toy? A. Put option B. Option to delay C. Option to expand D. Option to abandon 2. (3 points) Montalcino Co. has decided to take the company public by offering a total of 100,000 shares out of common stock to the public. The firm has hired Goldman Sachs, which arranges the best-effert underwriting and suggests an initial offer price of $20 per share with a 7 percent gross spread. As it turns out, the underwriters only sell 80,000 shares. How much cash will Baker Co. receive from its IPO? A. $2,000,000 B. $1,860,000 C. $1,600,000 D. $1,488,000 3. (3 points) Josh opted to exercise his January option at the end of December and paid $3,250 at that time to acquire 100 shares of stock. Which one of the following did Josh own? A. American call B. American put C. European call D. European put 4. (3 points) Which one of the following is correct? A. Ignoring the option to delay will cause the NPV of a project to be overestimated. B. The option to expand has a payoff structure of a call option. C. An American call has an expiration date, while a European call does not. D. The break-even point (stock price) of the call option with the exercise price of $25 and the call premium of $1 is $24. 5. (3 points) Your firm has an inventory turnover rate of 14 , a payables turnover rate of 8 , and a teceivables turnover rate of 19 . How long is your firm's operating cycle? A. 22.00 days B. 33.00 days C. 45.28 days D. 71.70 days