Which of the Following Best Defines a European Options

question 231

Multiple Choice

Which of the following best defines a European options?

• A) A bond that can be exchanged for a fixed number of shares of stock for a specified amount of time.
• B) An option granted to an employee by a company giving the employee the right to buy shares of stock in the company at a fixed price for a fixed time.
• C) An option that can be exercised only on the expiration date.
• D) The act of buying or selling the underlying asset via the option contract.
• E) The last day on which an option can be exercised.

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Definitions:

Cost-plus Pricing

A pricing strategy where the selling price is determined by adding a specific markup to the cost of producing or purchasing the product.

Return on Investment

Return on investment is a measure used to evaluate the efficiency or profitability of an investment, calculated as net income divided by the initial cost of the investment.

Selling Price

The amount at which a product or service is offered to customers, factoring in costs, desired profit margins, and market conditions.

Absorption Costing

An accounting system that factors in all production costs—direct labor, direct materials, and both fixed and variable manufacturing overheads—into the pricing of a product.