The Value of a Listed Put Option on a Share

question 43

Multiple Choice

The value of a listed put option on a share is lower when ________.
I. the exercise price is higher
II. the contract approaches maturity
III. the share decreases in value
IV. a share split occurs

• A)II only
• B)II and IV only
• C)I, II and III only
• D)I, II, III and IV

---

Definitions:

Activity Level

The volume of production or the degree of service activity which directly affects the amount of various costs incurred.

Fixed Cost

An expense that does not change with the level of production or sales over a short period.

Sales Commissions

The payment given to sales employees based on the amount of sales they generate, typically a percentage of the sale price.

Sales Volume

The amount of goods or services a company sells over a certain time frame.