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A Mine Can Be Viewed as an Option to Extract

Question 8

Multiple Choice

A mine can be viewed as an option to extract minerals:


A) at a strike price equal to the cost of extraction less risk free cost of capital.
B) at a strike price equal to the cost of extraction.
C) at a strike price greater than the cost of extraction plus the premium.
D) at a strike price less than the cost of extraction.

Correct Answer:

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