A Put Option Increases in Value When the Stock Price

question 54

True/False

A put option increases in value when the stock price decreases.

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Definitions:

Fixed Costs

Costs that do not change with the level of production or sales over a certain range and period, such as rent, salaries, and insurance premiums.

Unit Contribution Margin

The amount by which the selling price of a unit exceeds its variable costs, contributing to covering fixed costs and generating profit.

Selling Price

The amount for which a product or service is sold to the customer, determined by factors like cost, market demand, and competitive pricing.

Margin Of Safety

The difference between actual sales and sales at the break-even point. It measures the extent to which sales can decline before a business incurs a loss.