1.The value of real option calculated using volatility of revenue ________ the true value of the real option in the presence of fixed cost, because volatility of revenue is _________ compared to volatility of profit. a. overestimates; higher b. underestimates; higher c. overestimates; lower d. underestimates; lower

2.

Volatility smile is the relationship between

	a.	Implied volatility and observed option price
	b.	Implied volatility and option time to expiration
	c.	Implied volatility and Black-Scholes option price
	d.	Implied volatility and option strike price