The Value of a Listed Put Option on a Stock

question 55

Multiple Choice

The value of a listed put option on a stock is lower when:
I. The exercise price is higher.
II. The contract approaches maturity.
III. The stock decreases in value.
IV. A stock split occurs.

• A) II only
• B) II and IV only
• C) I, II, and III only
• D) I, II, III, and IV

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Definitions:

Note Receivable Dishonored

Occurs when a debtor fails to fulfill the obligations of a promissory note they have issued.

Account Receivable

Account receivable is the money owed to a business by its customers for goods or services delivered but not yet paid for.

Bad Debts Expense

The cost reported by a company due to the unrecoverable credit it extended to its customers, representing expected losses from unpaid financial obligations.