A European Put Option Can Be Exercised

question 97

Multiple Choice

A European put option can be exercised

• A)any time in the future.
• B)only on the expiration date.
• C)if the price of the underlying asset declines below the exercise price.
• D)immediately after dividends are paid.
• E)none of the above.

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Definitions:

Implicit and Explicit Costs

Implicit costs are indirect, non-monetary expenses related to the use of resources owned by the business, while explicit costs are direct, monetary payments for resources not owned by the firm.

Accounting Profit

The financial gain calculated by subtracting total explicit costs from total revenue, representing the net income reported on a company's financial statements.

Explicit Costs

Direct, out-of-pocket payments for expenses incurred in conducting business, such as rent, salaries, and materials.

Economic Profits

The disparity between the amount a business earns in total and the sum of its outright and inferred expenses.