Which of the Following Statements Is CORRECT

question 9

Multiple Choice

Which of the following statements is CORRECT?

• A) An option's value is determined by its exercise value,which is the market price of the stock less its strike price.Thus,an option can't sell for more than its exercise value.
• B) As a stock's price increases,the premium portion of an option on that stock increases because the difference between the stock price and the fixed strike price increases.
• C) If the company is consistently profitable,its call options will always be in the money.
• D) The market value of an option depends in part on the option's length of time until expiration and on the variability of the underlying stock's price.
• E) The potential loss on an option decreases as the option sells at higher and higher prices because the profit margin becomes larger.

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Definitions:

Managers

Individuals responsible for planning, organizing, directing, and controlling resources to achieve specific organizational goals.

Subordinates

Employees or team members who are lower in rank or position and are typically under the direction of a manager or supervisor.

Mechanistic Designs

Mechanistic designs in organizations are structured, hierarchical, and bureaucratic systems, characterized by clear, rigid divisions of labor and centralization of decision-making.

Tight Structures

Organizational frameworks characterized by strict rules, procedures, and hierarchical relationships intended to ensure control and order.