Crissel Food Products Has a Margin Per Unit of $5

question 45

Multiple Choice

Crissel Food products has a margin per unit of $5.00 for a high-end brand of pasta,total fixed expenses of $50 million,and a market demand of 400 million packs per year.Calculate the break-even market share of the company.

• A)2.5%
• B)5%
• C)7.5%
• D)10%
• E)12.5%

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Definitions:

Call Option

A financial contract that gives the buyer the right, but not the obligation, to buy an asset at a specified price within a specific time period.

Delta

In finance, typically refers to the ratio comparing the change in the price of an asset, usually a derivative, to the change in the price of its underlying asset.

Time Value

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

February Put

An options contract giving the holder the right but not the obligation to sell a specified amount of an underlying asset at a predetermined price on or before a specified date in February.