A Cost That Varies Proportionately with Increases in Activity Is

question 27

Multiple Choice

A cost that varies proportionately with increases in activity is called:

• A) a variable cost.
• B) a fixed cost.
• C) a semi-variable cost.
• D) none of the above.

---

Definitions:

Strike Price

The specified price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security.

Market Price

The ongoing price point for buying or selling a service or asset in the market.

Put Option

An agreement that allows the holder to sell a predetermined quantity of a particular asset at an agreed-upon price before a certain deadline, without being required to do so.

Exercise Price

The exact price at which an option's holder is allowed to purchase (for a call option) or sell (for a put option) the asset underlying the option.