When a Firm Subtracts Its Cost of Sales from Its

question 14

Multiple Choice

When a firm subtracts its cost of sales from its net sales, the amount left over is called:

• A) gross margin.
• B) return on assets.
• C) net profit.
• D) expenses.
• E) gross sales.

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Definitions:

Exercise Price

The price at which the holder of an option can buy or sell the underlying security.

European Calls

Options contracts that allow the buyer to purchase a stock or asset at a specific price on or before the expiration date, but only on that date.

Expiration Date

The final date by which an option or other financial instrument must be exercised or becomes void.

Call Option

An agreement that grants the purchaser the flexibility, without the necessity, to acquire a stock, bond, commodity, or different asset at an agreed price during a definite timeframe.