FIN 534 RANK Imagine Your Future /fin534rank.com FIN 534 RANK Imagine Your Future /fin534rank.com | Page 89

N(d1) and N(d2) represent areas under a standard normal distribution
function. Using the Black- Scholes model, what is the value of the call
option?
a. $2.81
b. $3.12
c. $3.47
d. $3.82
e. $4.20
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FIN 534 Week 5 Chapter 9 Solution
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Bankston Corporation forecasts that if all of its existing financial
policies are followed, its proposed capital budget would be so large that
it would have to issue new common stock. Since new stock has a higher
cost than retained earnings, Bankston would like to avoid issuing new
stock. Which of the following actions would REDUCE its need to issue
new common stock?