The Profit of an Index Option Is Determined By

question 57

Multiple Choice

The profit of an index option is determined by:

• A)the total value of the increase in the index.
• B)the total value of the option.
• C)the size of the premium.
• D)More than one above

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Definitions:

Markdown

A reduction from the original or previous selling price of goods or services.

Breakeven

The juncture where total expenses match total income, leading to neither a net profit nor a loss.

Mark-up

A financial addition to the product's cost to cater to company overheads and profit gain.

Wholesaler

An individual or entity that buys goods in large quantities from producers to resell them to retailers or directly to customers, but typically not to the final consumer.