Digital Options Can Be Used to Synthetically Create a Position

question 22

Multiple Choice

Digital options can be used to synthetically create a position in an underlying instrument by

• A)purchasing a cash-or-nothing digital put and selling an asset-or-nothing digital call
• B)purchasing both a cash-or-nothing digital call and a cash-or-nothing digital put
• C)purchasing both an asset-or-nothing digital call and an asset-or-nothing digital put
• D)purchasing a cash-or-nothing digital call and selling a cash-or-nothing digital put
• E)purchasing an asset-or-nothing digital call and selling an asset-or-nothing digital put

Understand the basic concepts and definitions of standard costing, including direct labor, efficiency standards, and standard costs.

Differentiate between ideal standards and normal standards and their impact on variances.

Recognize how standard costs are implemented and utilized within the general ledger and accounting systems.

Appreciate the process and complexity involved in setting standard costs, including the roles of various departments.

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Definitions:

Primary Reinforcer

An innately satisfying stimulus, such as food or warmth, that does not require any learning to become desirable.

Salient

Referring to something that is prominent, significant, or conspicuous in a particular context.

Extinction

In behavioral psychology, the gradual weakening and eventual disappearance of a conditioned response when the reinforcement is no longer offered.

Punishment

A consequence applied to decrease or eliminate an unwanted behavior, typically involving either physical or psychological discomfort.