________ Are Incurred to Ensure That Products Are Created Without

question 5

Multiple Choice

________ are incurred to ensure that products are created without defects the first time.

• A)External failure costs
• B)Inspection costs
• C)Internal failure costs
• D)Prevention costs

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Definitions:

Strike Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security or commodity.

Hedge Ratio

The ratio of the size of a position in a hedging instrument to the size of the exposure it seeks to hedge.

Call Option

A financial contract giving the buyer the right, but not the obligation, to purchase a stock, bond, commodity, or other asset or instrument at a specified price within a specific time period.

Put Option

This contract permits a person to have the option, without being compelled, to sell a certain amount of a base asset at a fixed price within a designated timeframe.