Which of the Following Statements Is False

question 2

Multiple Choice

Which of the following statements is false?

• A) For a call written on a stock with a positive beta, the beta of the call always exceeds the beta of the stock.
• B) The beta of a put option written on a negative beta stock is always negative.
• C) As the stock price changes, the beta of an option will change, with its magnitude falling as the option goes in-the-money.
• D) A put option is a hedge, so its price goes up when the stock price goes down.

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Definitions:

Work in Process

Inventory representing partially completed goods that are still in the process of production.

Direct Labor

The wages and benefits paid to employees who are directly involved in the production of goods or services.

Standard Costs

Predetermined costs for manufacturing goods, used as benchmarks to measure performance.

Average Cost

The total cost divided by the number of units, used to calculate cost of goods sold and ending inventory valuation.