Pure Options Are Instruments That Are

question 91

Multiple Choice

Pure options are instruments that are

• A) Created by investors outside the firm.
• B) Bought and sold primarily by investors and speculators.
• C) Of greater importance to investors than to financial managers.
• D) All of the above.
• E) None of the above.

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Definitions:

Relevant Range

The range of activity or volume over which the assumptions about variable and fixed cost behaviors hold true, beyond which cost patterns may change.

Cost Behavior

The way in which a cost reacts to changes in the level of activity.

Fixed Cost

Costs that do not change with the level of production or output, remaining constant even as volume changes.

Relevant Range

The range of activity within which the assumptions about fixed and variable costs are valid. Beyond this range, cost behaviors may change.