The FTSE Index Is at 5,100

question 10

Multiple Choice

The FTSE index is at 5,100.You are short a straddle on the FTSE 100.struck at 5,100 and long a 5,000/5,200 strangle.You are also short a 5,000-5,100-5,200 butterfly.Ceteris paribus,an increase in the level of the FTSE

• A)Increases the value of your portfolio.
• B)Has no effect on the value of your portfolio.
• C)Decreases the value of your portfolio.
• D)Any of the above is possible.

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Definitions:

Fixed Manufacturing Overhead

Indirect manufacturing costs that do not change with the level of production, such as salaries of managers and depreciation of factory equipment.

Estimated Labor-Hours

A projection of the total hours of work required to complete a task or project.

Variable Manufacturing Overhead

The indirect, variable costs associated with manufacturing a product, which change in proportion to production volume.

Fixed Manufacturing Overhead

Refers to the regular, consistent expenses incurred in the operation of a manufacturing facility that do not vary with production volume, including salaries of permanent staff, rent, and insurance.