Group 4
Dr. Uygur
FIN MGT II
Questions for Team #1
1. What is the difference between sigma squared (variance) for a real option and sigma
squared for a financial option?
2. What can you do if there are no financial options models that can be applied to a real
option for a specific project?
3. If the cash flows that correspond to the 40% probability all became $10, what would
happen to the value of the call option?