Which of the Following Is an Assumption of CVP Analysis

question 92

Multiple Choice

Which of the following is an assumption of CVP analysis?

• A)Costs must be separated into separate fixed and variable components.
• B)Total revenues and total costs are curvilinear in relation to output units.
• C)Given revenue mixed of products is dynamic.
• D)There will be a change between beginning and ending levels of inventory.
• E)The time value of money must be taken into account.

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Definitions:

Put Option

A put option is a financial contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

Call Option

An agreement in finance which allows the purchaser to have the option, but not the commitment, to purchase a certain amount of a specific asset at a pre-agreed price during a fixed period.

Specified Price

A predetermined price set in a contract or agreement, often related to sales or financial instruments.

Perfect-Hedging

A risk management strategy that completely eliminates the risk associated with an investment by taking an equal but opposite position in the derivatives market.