Which of the Following Statements Concerning Options Are Correct

question 73

Multiple Choice

Which of the following statements concerning options are correct?
I. Options are derivative securities.
II. The value of an option is dependent upon the value of the underlying security.
III. The seller of the option retains the option premium whether or not the option is exercised.
IV. Options can provide leverage benefits.

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

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Definitions:

Flexible Budget

A budget that adjusts or flexes with changes in the volume or activity level.

Static Planning Budget

A budget based on a fixed level of activity and does not change in response to variations in the actual level of activity.

Activity Variances

The differences between planned or standard costs of activities and the actual costs incurred, useful for management in budgeting and performance evaluation.

Patient-visits

Refers to the total number of times patients see a healthcare provider or visit a healthcare facility for services.