Under the Incremental Method of Allocating Common Costs ________

question 132

Multiple Choice

Under the incremental method of allocating common costs ________.

• A) the parties are interested in being viewed as primary users
• B) each party bears a proportionate share of the total costs in relation to their individual stand-alone costs
• C) the first-incremental user bears a higher proportion of the cost in comparison with the primary user
• D) the primary user bears the maximum of the total cost

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Definitions:

Net Position

The difference between the total number of long and short positions that a trader or institution holds in a particular security, currency, or commodity.

Open Interest

The total number of outstanding derivative contracts, such as futures or options, that have not been settled.

Spread Position

In trading, holding a combination of options positions that offset each other, to capitalize on movements in market prices or volatility.

Maturity

The date on which a financial obligation must be repaid or the final due date on which a bond or other debt instrument comes due and the principal must be paid back.