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

Delta measures the change in the option price for a $1 change in the value of the underlying asset. Therefore, the increase in the value of equity can be calculated as:
ΔV = Delta * Project Cost = 0.792 * €50,000 = €39,600. Thus, the option will increase the value of equity by €39,600.

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