An Investor with a Long Position in a Security Will

question 78

Multiple Choice

An investor with a long position in a security will make money:

• A)if the price of the security increases.
• B)if the price of the security declines.
• C)if the price of the security remains stable.
• D)only if the security has been purchased on margin.
• E)only by shorting the security.

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Definitions:

Variable Overhead

The indirect expenses that fluctuate with the level of production activity, such as utilities for the manufacturing plant.

Overhead Absorption Rate

Budgeted overhead divided by budgeted volume. Also called overhead application rate.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process.

Standard Volume

The amount of volume the plant would have generated if each unit of product manufactured used precisely the standard unit of volume allowed.