Which of the Following Statements Is FALSE

question 56

Multiple Choice

Which of the following statements is FALSE?

• A)Because a short position in an option is the other side of a long position,the profits from a short position in an option are just the negative of the profits of a long position.
• B)The deeper out-of-the-money the put option is,the less negative its beta,and the higher is its expected return.
• C)Although payouts on a long position in an option contract are never negative,the profit from purchasing an option and holding it to expiration could well be negative because the payout at expiration might be less than the initial cost of the option.
• D)The put position has a higher return in states with low stock prices;that is,if the stock has a positive beta,the put has a negative beta.

Acknowledge the implications of different credit policy variables and their impact on a firm's cash flows and customer behavior.

Calculate and analyze the financial implications of changes in credit terms and discount policies.

Understand the principles of managing receivables, including monitoring and evaluation techniques.

Comprehend the strategic decisions regarding the investment in marketable securities and the management of temporary idle cash.

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Definitions:

Managerial Performance

Evaluation of the effectiveness with which managers achieve organizational goals and utilize resources efficiently and effectively.

Cosmetics Division

A specialized department or sector within a company focused on the production and sale of beauty, skincare, and personal care products.

Return on Investment

A measure of the profitability or efficiency of an investment, calculated as the net profit from the investment divided by its cost.

Residual Income

Operating income that exceeds a set minimum return on operating assets, used as a measure of the profitability and performance of a business unit.