Sue Has a Contract That Grants Her a Right That

question 69

Multiple Choice

Sue has a contract that grants her a right that she may or may not decide to exercise. This right increases in value as the value of the asset underlying her contract declines. Which one of these did she do to create this situation?

• A) Purchased a call option
• B) Purchased a put option
• C) Purchased and simultaneously sold the same call option
• D) Sold a call option
• E) Sold a put option

---

Definitions:

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects cash from its credit sales by dividing net credit sales by the average accounts receivable.

Allowance For Bad Debts

An estimate of the amount of credit sales that are expected not to be collected, which is subtracted from total receivables in a company's financial statements to show a more accurate picture of net revenue.

Sales Volume

The total quantity of sales of a product or service within a specified period.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term and long-term obligations, calculated as current assets divided by current liabilities.