All of the Following Are True of Calls and Puts

question 101

Multiple Choice

All of the following are true of calls and puts EXCEPT

• A) options are issued by businesses.
• B) the presence of options trading in the firm's stock could, by increasing trading activity, stabilize the firm's share price in the marketplace.
• C) options are not a source of funding to the corporation.
• D) the financial manager of a corporation has very little need to deal with options.

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Definitions:

Fixed Manufacturing Expenses

Costs that do not change with the level of production, such as rent, salaries, and depreciation of equipment.

Selling and Administrative Expenses

Costs related to the selling of products and the administration of the business, not directly tied to production.

Constrained Resource

A limited resource in a production or project management environment that can restrict output or throughput.

Current Profitability

A measure of a company's financial performance in the short term, often evaluating the income it generates over a recent period against the expenses.