"The incorporation of real options into project valuation may be challenging and therefore, not always possible." A friend suggested that in their view any or, all of the following reasons would vindicate the speaker's claim: I It can be difficult to pin down an 'exact' answer in real options calculations. II Valuation of real options can be complex. III Competitors also have real options, which can alter the value of your options. IV Real options don't always have a clear structure Which of the above reasons is FALSE and, therefore, unnecessary to support the claim? A 1 B II III D IV E None of the above In the Black-Scholes formula: Value of a call = [N(dj) x P] - [n(dz) x PV(EX)] {N(d), (i=1,2)} is the probability that a normally distributed variable will be than d; standard deviations above the mean: A Less Greater Neither of the above. Given that the spot rates are: r1 = 2.5%, r2 = 5%, r3 = 7.5%, 14 = 10%. What is the approximate price of a 4-year zero-coupon bond with face value of 1,000? A 800.01 B 683.01 600.01 D 585.01 E None of the above Given a 2-year bond with 10% coupon rate, 1,000 face value and yield of 12.5%. If coupons are paid annually, which of the following statements is TRUE? A The price of the bond is 1,086.78 and it sells at premium B The price of the bond is 1,086.78 and it sells at discount The price of the bond is 1,000.00 and it sells at par D The price of the bond is 958.02, and it sells at discount E None of the above