Sep/Dec 2015 Furlion Co

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December 6, 2018 at 4:56 am #487810
jayped
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Hi Sir,

Question 4 in the Sep/Dec 2015 sample utilises a call option for deciding whether to establish the plant. In a scenario like this one, what indicates that it is a call option we are valuing?

Thanks.
December 6, 2018 at 5:18 am #487813
jayped
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March/June 2016 paper Question 4 not Sep/Dec Sorry
December 6, 2018 at 7:21 am #487849
John Moffat
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It is an option to expand and is therefore a call option (see Chapter 14 of our free lecture notes, and the lectures that go with it).
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