alleryStart learning →An option to abandon for salvage value is equivalent to which financial option?
ACall option
BPut option
CForward contract
DSwap contract
Answer & Solution
Correct answer: B. Put option
Selling the asset when remaining cash flows fall below liquidation value is exercising a put.
Keep practising Derivatives Analysis and Valuation
Browse all Derivatives Analysis and Valuation questions for CA Final, or explore more Strategicfinancialmanagement topics.
Related questions
Which is the most widely used method for valuing real options, as most are American styledAn electric utility can switch between fuel sources. This is which type of option?In real options, what is non-recoverable upfront spending for flexibility called?Which option is equivalent to a call option on extra capacity?Which pricing method computes the average of past payouts and is only a rough guide?Why is Black-Scholes not a standard model for weather derivatives?Who struck the first weather derivative deal in July 1996?Outside the U.S., what reference point is used for HDD contracts?