The managers of Virginia Hydroponics Co. have included an investment timing option into the design of a proposed capital investment project: I. This option allows a firm to temporarily terminate operations in order to prevent experiencing negative cash flows
II. This option allows a firm to shut down a project if its cash flows are lower than expected.
III. This option provides a firm with the flexibility to make potentially profitable investments in the future that would not have been possible if the initial project had not been undertaken.
IV. This option allows a firm to postpone a project until it can gather more information or market conditions change.
Which of the listed statement best describes a shutdown option?
a. Statement II
b. Statement I
c. Statement III
d. Statement IV
e. None of the statements listed above describes a shutdown option.

Zapper has beginning equity of $257,000, net income of $51,000, dividends of $40,000 and investments by stockholders of $6,000. its ending equity is

Security a has a higher standard deviation of returns than security b. we would expect that: (i) security a would have a risk premium equal to security b. (ii) the likely range of returns for security a in any given year would be higher than the likely range of returns for security b. (iii) the sharpe ratio of a will be higher than the sharpe ratio of b. (a) i only (b) i and ii only (c) ii and iii only (d) i, ii and iii

Suppose there are three types of consumers who attend concerts at your university’s performing arts center: students, staff, and faculty. each of these groups has a different willingness to pay for tickets; within each group, willingness to pay is identical. there is a fixed cost of $1,000 to put on a concert, but there are essentially no variable costs. for each concert: i. there are 140 students willing to pay $20. (ii) there are 200 staff members willing to pay $35. (iii) there are 100 faculty members willing to pay $50. a) if the performing arts center can charge only one price, what price should it charge? what are profits at this price? b) if the performing arts center can price discriminate and charge two prices, one for students and another for faculty/staff, what are its profits? c) if the performing arts center can perfectly price discriminate and charge students, staff, and faculty three separate prices, what are its profits?