Calculate the Value of a Long Put If the Exercise

question 45

Multiple Choice

Calculate the value of a long put if the exercise price is $10.00,the premium is $1.50 and the spot price is $8.00,given V=max(X-S,0) - P.

• A) -$3.00
• B) -$1.50
• C) $0.00
• D) $0.50

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Definitions:

Budgeted Unit Sales

The projected amount of sales in units that a company plans to achieve in a specific period.

Cash Disbursements

Payments made in cash by a business for various purposes, including operating expenses, asset purchases, and debt repayments.

Variable Overhead Rate

The rate at which variable overhead costs are applied to units of production, based on an activity metric such as labor hours.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as salaries of managers and rent for the factory.