What Is an Option

question 12

Multiple Choice

What is an option?

• A)A contract that gives the holder the right to sell an instrument at a pre-specified price.
• B)A contract that is derived from some other underlying quantity,index,asset or event.
• C)A contract that gives the holder the right to acquire an instrument at a pre-specified price.
• D)A contract that gives the holder the right to buy or sell something at a specified price.

Compute trend percents to analyze the financial performance and position over multiple periods.

Calculate and interpret the days’ sales in inventory to assess inventory management efficiency.

Understand the concept and calculation of the price-earnings ratio and its implications for stock valuation.

Compute and analyze the working capital to understand a company’s short-term financial health.

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Definitions:

Factory Overhead

Indirect manufacturing costs that are not tied directly to specific units of product, such as maintenance, utilities, and rent of a factory.

Direct Labor

Direct labor refers to the wages paid to workers who are directly involved in the production of goods or services, such as assembly line workers.

Direct Materials

Raw materials that can be directly attributed to the production of goods, evident in the final product.

Work In Process

Refers to the materials, labor, and overhead costs incurred for products that are in the process of being manufactured but are not yet complete.