Which of the Following Statements Is FALSE

question 93

Multiple Choice

Which of the following statements is FALSE?

• A)Put-call parity gives the price of a European call option in terms of the price of a European put, the underlying share, and a zero-coupon bond.
• B)Because a put is the right to sell the share, puts with a lower exercise price are less valuable.
• C)For a given exercise price, the value of a call option is higher if the current share price is higher, as there is a greater likelihood the option will end up in-the-money.
• D)The value of an otherwise identical call option is higher if the exercise price the holder must pay to buy the share is higher.

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Definitions:

Prime Costs

The combined costs of direct materials and direct labor that are directly involved in the production of goods.

Direct Materials Costs

Costs that are directly traceable to the production of specific goods or services, such as raw materials used.

Direct Labor Costs

Expenses related to employees who directly contribute to the production of goods or services, such as wages for assembly line workers.

Period Costs

Costs that are expensed in the period they are incurred rather than being capitalized or included in the cost of goods sold, such as selling, general, and administrative expenses.