Generalware,Inc

question 116

Essay

Generalware,Inc.sells a single product and reports the following results from sales of 100,000 units:
A foreign buyer wants to purchase 15,000 units.However,they are willing to pay only $36 per unit for this one-time order.They also agree to pay all freight costs.To fill the order,Generalware will incur normal production costs.Total fixed overhead will have to be increased by $60,000 to pay for equipment rentals and insurance.No additional administrative costs (variable or fixed)will be incurred in association with this special order.
Required:
(1)Should Generalware accept the order if it does not affect regular sales? Explain.
(2)Assume that Generalware can accept the special order only by giving up 5,000 units of its normal sales.Should the company accept the special order under these circumstances?

Identify the intrinsic value of options and how it compares to their actual market value.

Understand delta's role as a measure of sensitivity in option pricing.

Differentiate between in-the-money, at-the-money, and out-of-the-money options and their implications for option value.

Comprehend the concept of hedging in options trading and calculate hedge ratios.

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Definitions:

Internal Attribution

The inference that a person's behavior is caused by something intrinsic to them, such as their personality, disposition, or character.

External Attribution

The process of attributing the cause of a person's behavior to situational factors outside the individual.

Social Schemas

Cognitive frameworks that help individuals organize and interpret information about social environments and interactions.

Stereotypes

Widely held but fixed and oversimplified images or ideas of a particular type of person or thing, often based on generalizations.