Assume that the delta of a call option on a ﬁrm's assets is .792.This means that a €50,000 project will increase the value of equity by:

Question

Quizplus · Accepted Answer

The delta of a call option (.792) represents the sensitivity of the option's price to a change in the price of the underlying asset. Therefore, a €50,000 project increasing the firm's assets would increase the value of equity by 0.792 * €50,000 = €39,600.

Assume That the Delta of a Call Option on a ﬁRm's