The Maximum Gain for the Purchaser of a Call Option

question 18

Multiple Choice

The maximum gain for the purchaser of a call option contract is ________ while the maximum loss is ________.

• A) unlimited; the premium paid.
• B) the premium paid; unlimited.
• C) unlimited; unlimited.
• D) unlimited; the value of the underlying asset.

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Definitions:

Labor Rate Variance

The variance between the real labor cost and the anticipated (or norm) cost, calculated based on the working hours.

Materials Quantity Variance

A calculation of the difference between actual material usage and expected usage in production, multiplied by the standard cost for each unit.

Materials Price Variance

The difference between the actual cost of materials and the expected cost based on standard prices.

Raw Materials

Basic substances or components that are used in the initial stages of the manufacturing process to produce goods.