Which of the Following Describes a Protective Put

question 1

Multiple Choice

Which of the following describes a protective put?

• A) A long put option on a stock plus a long position in the stock
• B) A long put option on a stock plus a short position in the stock
• C) A short put option on a stock plus a short call option on the stock
• D) A short put option on a stock plus a long position in the stock

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Definitions:

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into the number of fully completed units that could have been produced with the same amount of input.

Conversion Costs

The total expense of converting raw materials into finished products, typically including both direct labor costs and manufacturing overhead.

Finished Goods Warehouse

A storage area or facility where manufactured products are kept until they are sold or distributed to customers.

Process Costing System

A costing method used for homogenous products, distributing costs across units of output on an average basis.