A firm in the mining industry whose major assets are cash, equipment, and a closed facility may sell at a premium to the market value of its assets. This premium is most plausibly attributed to
A)nearsighted investors.
B)the low exercise price held by its shareholders.
C)the option to open the facility when prices rise dramatically.
D)all of the options are correct.

Question

Quizplus · Accepted Answer

The premium can be attributed to the option to open the facility when prices rise dramatically. This option, combined with the cash and equipment, provides potential for future profitability and growth, leading investors to value the firm higher than just the market value of its current assets.

A Firm in the Mining Industry Whose Major Assets Are