Answer:
A flexible budget is a budget that adjusts or flexes with changes in volume or activity.
Explanation: For costs that vary with volume or activity, the flexible budget will flex because the budget will include a variable rate per unit of activity instead of one fixed total amount.
Suppose the cost of flying a 100-seat plane for an airline is $50,000 and there are 10 empty seats on a flight. The average cost per seat is a. $50. b. $500. c. $50,000. d. This cannot be determined from the information given.
Answer:
$500
Explanation:
The average cost per seat will be the total cost per plane divided by the seating capacity.
Therefore, the average cost of $50,000 divide by 100 seats
=$50,000/50 seats
=$500
NDP Mp will be equal to:
A. NDPFC + Depreciation
B. NDPFC + Indirect Taxes
C. NDPFC - Subsidies
D. NDPFC + Direct Taxes
Answer:
B) NDPFC + Indirect Taxes
Explanation:
Net domestic product (NDP) is obtained by subtracting depreciation from gross domestic product (GDP), and it can be calculated at market price (NDPmp) or at factor cost (NDPfc):
NDPmp = GDPmp – depreciationNDPfc = GDPmp – depreciation – indirect taxesIf we substitute NDPfc into option B, we will get:
NDPmp = NDPfc + indirect taxes
NDPmp = (GDPmp - depreciation - indirect taxes) + indirect taxes
NDPmp = GDPmp - depreciation
Adam Smith, the father of modern economics, wrote The Wealth of Nations in 1776. A key example in his book was a pin "manufactory." "The important business of making a pin is ... divided into about eighteen distinct operations," he wrote. Ten men were able to make 240 times as many pins as each working separately might accomplish. This is how Smith explained __________.
a. division of resources
b. pin manufacturing in the 1700s
c. division of labor and specialization.
Answer:
division of labor and specialization
Explanation:
CityProtect Corp., a medium-sized financial services company, has a departmentalization structure in which the employees are grouped together based on their area of expertise. Thus, the firm has separate teams that handle loans, stock broker services, accounting services, insurance plans, etc. This is an example of _____ departmentalization.
Answer: Functional
Explanation:
The functional departmentalization is one of the type of organized form of department in an organization in which the different types of employee are performing their task and function depend upon their individual expertise and capabilities.
The main advantage of the functional departmentalization is that it helps in reduce the complexity in an organization as depend upon different operation the task are get divided to the different department in the company.
According to the given question, the given example of the City-protect corporation is best illustrating the functional department concept. Therefore, Functional is the correct answer.
Waterway Industries has gathered the following information concerning one model of shoe: Variable manufacturing costs $35000 Variable selling and administrative costs $20000 Fixed manufacturing costs $160000 Fixed selling and administrative costs $120000 Investment $1700000 ROI 20% Planned production and sales 5000 pairs What is the desired ROI per pair of shoes
Answer:
0.004% or $68 of net profit per pair of shoes
Explanation:
return on investment = 20% (net profit / total investment)
since total investment = $1,700,000, then the company's profit = $1,700,000 x 20% = $340,000
if the company is planing on selling 5,000, then each shoe should generate $340,000 / 5,000 shoes = $68 in net profit
ROI per pair of shoes = $68 / $1,700,000 = 0.00004 x 100 = 0.004%
James has $1500 to open a checking account. He can maintain a monthly balance of at least $1000. He plans to use the ATM four times per month at his local branch. He does not overdraft his account and plans to use direct deposit. He also plans to pay his bills online and he averages 8 bills per month.
A. Account B
B. Account A
Answer:
B. Account A
Explanation:
James has $1500 to open a checking account. He can maintain a monthly balance of at least $1000. He plans to use the ATM four times per month at his local branch. He does not overdraft his account and plans to use direct deposit. He also plans to pay his bills online and he averages 8 bills per month.Account A
Answer:
Account A
Explanation:
Ronak is a project manager. He ensures that his project is completed on time by dividing the activities in the project into two stages: production and quality check. Which problem-solving strategy is Ronak using to meet the deadline?
Answer:
Forming subgoals
Explanation:
Subgoal is formed when learners are working toward a certain goal and notice that a set of steps puts them in a situation that allows them to ultimately achieve the goal.
Options:
A. forming subgoals
B. working backward
C. trial and error
D. means-ends analysis
Answer:
A. forming subgoals
Explanation:
In project management, it is always necessary to break down the project's final objective (goal) in smaller subgoals, so that you can divide your schedule's content and time. Imagine a project for building a factory that should take 2 years, you need to divide the project's goal (factory) into smaller subgoals in order to control how the project advances. The sum of all the subgoals should be the final goal.
It is normal that projects suffer form setbacks, changes and other alterations, so the subgoals must be adjusted to them.
Increased size of financial institutions resulting from financial consolidation increases the ________ problem, because there are now more large institutions whose failure would expose the financial system to systemic risk.
Answer:Increased size of financial institutions resulting from financial consolidation increases the to big to fail problem,
Explanation:
First challenge which the financial consolidation poses is that when the financial institutions size increases it brings the to big to fail problem. The systematic risk exposure increases as it has more large institutions in the financial system.
The other challenge here includes that is when the financial consolidation takes place between the banks and other financial service firms then the government safety net covers the new activities undertaken. Which can be securities underwriting, real estate or insurance activities. This is provided as an incentive for taking huge risks.
An organization has a standing order with a supplier. the organization has ordered the same product in the same quantity monthly over the past year. the purchasing manager has decided to change suppliers in order to get a better price. the order the purchasing manager places with the new supplier is an example of a ________.
Answer:
Modified Rebuy.
Explanation:
Modified Rebuy can be defined as the desires of a buyer to re-purchase or reorder the products previously bought but with certain modifications either in prices, products, suppliers, or terms. The buyer may modify the current purchasing terms because he may not be satisfied with the supplier or may have some new requirements.
In the given case, the modification in supplier has been made by the organization to get a better price. Thus this is an example of modified rebuy.
So, the correct answer is modified rebuy.
The ________ manages all systems throughout the organization and the day-to-day operations of the entire IS organization. Question 1 options:
1) applications development manager
2) CIO
3) information center manager
4) IS Director
Answer:
The answer in this case would be option 4) or IS Director.Explanation:
In an IS organization, one of the most important directorial duty or responsibility of an IS Director is to oversee the regular or normal day to day functioning of the organization to ensure effectiveness and efficiency of the regular operational activities or conducts.An IS Director also manages all the relevant and concerned systems throughout the entire organization to facilitate the regular operational functioning of the organization.Therefore, the relevant duties and responsibilities of a IS Director mostly relates to operational aspects and system management.It should be noted that IS Director manages all systems throughout the organization and the day-to-day operations of the entire IS organization.
This IS Director is responsible for how the system is able to manage their resources in achieving tangible goal that has been set by the entire IS organization.Therefore, option D is correct.
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Producer surplus equals a. Value to buyers - Costs of sellers. b. Amount received by sellers - Costs of sellers. c. Value to buyers - Amount paid by buyers + Amount received by sellers - Costs of sellers. d. Value to buyers - Amount paid by buyers.
The producer surplus in Economics equals the amount received by sellers minus the cost to sellers. It demonstrates the monetary gain by sellers for being able to sell a product at a price higher than the minimum price they would be willing to sell at.
Explanation:The correct answer to this question is: b. Amount received by sellers - Costs of sellers. This is known as the producer surplus. In economics, producer surplus represents the monetary gain obtained by producers because they are able to sell at a market price that is higher than the lowest price at which they would be willing to sell their goods. It is the difference between the price that producers actually receive for a product and the minimum price at which they would be willing to sell it.
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Producer surplus is the extra benefit received by sellers in a market, calculated by subtracting the costs of sellers from the amount received by sellers.
Explanation:. It represents the extra benefit received by the sellers in a market. To calculate producer surplus, you subtract the costs of sellers from the amount received by sellers. So the correct answer is a. Value to buyers - Costs of sellers. For example, if producers are willing to sell a product for $50 and the market equilibrium price is $40, the producer surplus would be $10.
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In 2008, Jiffy Lube began a marketing campaign which encouraged women to focus on their cardiovascular health. Jiffy Lube's "Maintenance Partners for Life" combines the concepts of maintaining heart and vehicle health, while seeking to raise $1 million in support of the American Heart Association's current "Go Red for Women" campaign. Jiffy Lube is engaging in:
cause marketing
Answer:Cause marketing
Explanation:
Cause marketing is the strategy where the motive is to increase the profits of the organisation as well as have concern for the society. Jiffy Lube marketing campaign includes a social cause of maintaining the cardiovascular health and also through this campaign they are trying to raise $1 million which is monetary based.
So cause marketing is for both creating awareness about the cause and also to raise funds to support the campaign. The brand's message is also given as well as the profits are also made through this campaign.
Jiffy Lube's 'Maintenance Partners for Life' campaign is an example of cause marketing. This type of marketing strategy involves a company aligning its promotional campaigns with a charitable cause, benefiting both the company and the cause.
Explanation:In 2008, Jiffy Lube launched a campaign called 'Maintenance Partners for Life' focusing on both heart and vehicle health, aiming to raise $1 million for the American Heart Association's 'Go Red for Women' campaign. This strategy, in which a company aligns its marketing efforts with a charitable cause, is known as cause marketing.
Cause marketing, can enhance a company's public image, increase their customer base and boost sales, while also supporting a worthwhile cause. Jiffy Lube's campaign perfectly exemplifies a strategic approachthat benefits both the charitable organization and the business itself.
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Since Al's Auto Parts has had trouble with its windshield wiper manufacturer in the past, it is requesting a guarantee from the company before it will place another order. Which of the service quality dimensions is being addressed in this scenario?a. responsivenessb. ethicsc. tangiblesd. assurancee. Empathy
Answer:
Assurance
Explanation:
Assurance refers to the financial inclusion of compensation for goods and services. Assurance is partly different from insurance, the guarantee is applied partially for an unlimited period. Lack of trust due to past experience is what the company wants. Guarantees or insurance are usually provided to reassure customers. In this scenario it is possible to request a guarantee before the next order is issued.Clay offers to pay Diane $50 for a golf lesson for Ewan. They agree to meet on Friday to exchange the cash for the lesson. These parties have made a bilateral contract. a unilateral contract. a void contract. an executive contract.
Answer:
Bilateral contract.
Explanation:
Bilateral contract: It is a legally binding contract between two or more parties, wherein each party agree to fullfil the promise made to each other.
There are four elements necessary for the existence of a bilateral contract:
Agreement.Consideration.Intention to create legal relations.Certainty.In the given case, Clay offers to pay Diane $50 for a golf lesson for Ewan, which they are fulfilling by agreeing to meet on Friday to exchange the cash for the lesson. Therefore, these parties have made a bilateral contract.
The appropriate maintenance policy is developed by balancing preventive maintenance costs and breakdown maintenance costs. The problem is that A. full breakdown costs are seldom considered. B. breakdown maintenance must be performed regardless of cost. C. preventive maintenance costs are very difficult to identify. D. preventive maintenance should be performed regardless of cost.
Answer:
A. full breakdown costs are seldom considered.
Explanation:
In developing an appropriate maintenance policy a business will have to consider cost. It will balance preventive maintenance costs and breakdown maintenance costs.
This process requires a full breakdown of the costs imvolved. On the one hand cost of preventive maintenance should only include essential activities without which preventive measures will fail.
While breakdown maintenance cost will involve activities that will bring broken down processes and assets back to functionality as soon as possible.
Answer:
A. full breakdown costs are seldom considered.
Explanation:
In Business economics, the appropriate maintenance policy is developed by balancing preventive maintenance costs and breakdown maintenance costs.
However, the problem is that full breakdown costs are seldom considered by businesses owners.
Full breakdown costs involves the process of identifying the individual elements that comprise the total cost of a particular product or service.
A state or local government has the following funds Special revenue fund Pension (and other employee benefit) Enterprise fund Permanent fund Internal service fund Private purpose trust fund Custodial fund How many governmental funds does this entity have?
Answer:
Sales taxes collected by Harold to be distributed to other governmental units: 500,000 ... A special revenue fund is a governmental fund that accounts for the proceeds of specific revenue sources legally ... A state or local government has the following funds: ... Both proprietary funds (enterprise and internal service) are listed.
Explanation:
The financial statements of governmental funds are prepared on the modified accrual basis of accounting. Under modified accrual accounting, revenues are recognized when they are both measurable and available to finance expenditures of the current period.
Pharoah Company started the year with $74400 in its Common Stock account and a credit balance in Retained Earnings of $54600. During the year, the company earned net income of $59500, and declared and paid $24800 of dividends. In addition, the company sold additional common stock amounting to $34700. As a result, the balance in retained earnings at the end of the year would be
Answer:
$89,300
Explanation:
The computation of the ending retained earning balance is shown below:
The ending balance of retained earning = Beginning balance of retained earnings + net income - dividend paid
= $54,600 + $59,500 - $24,800
= $89,300
We simply added the net income and deduct the dividend to the beginning balance of retained earning so that the ending balance of retained earning could come
A limited partner will be liable for business debts if he or she
Answer:
actively manage the business
Explanation:
A Limited Partnership is a partnership consisting of a general partner and a limited partner.
A general partner manages the business and is liable for the business debts and obligations whereas a limited partner has limited liability and he does not participate in management.
A limited partner will be liable for business debts if he or she actively manage the business.
Milo Co. had 600,000 shares of common stock outstanding on January 1. On May 1, Milo issued 126,000 shares. On September 1, Milo purchased 63,000 shares of treasury stock. The weighted average shares outstanding for the year is:________.a. 751,000.b. 663,000.c. 793,000.d. 814,000.
Answer:
b. 663,000
Explanation:
Outstanding shares refers to the total number of stock held by investors at a particular time. They are the shares issued out to both retail and institutional investors and insiders, such as directors and employees. Outstanding shares will exclude shares that have been repurchased back by the issuing company (treasury stock).
The weighted average share outstanding takes into consideration the duration of time that issued stocks have been in the markets. It allocates value proportionately to the time in the market.
For Millo Co, the weighted average share outstanding for the year will be
1. January 1, 600,000
2. May 1, issued 126,000 shares ( 8 months)
weighted for the year=8/12 x 126,000 = 84,000
3. September 1, purchased 63,000 treasury stock
(4 months) weighted value will be
= 4/12 x 63,000= 21,000
The weighted average share outstanding
Beginning balance plus shares issued out minus repurchased shares(treasury stock)
=600,000 + 84,000 -21,000
=663,000
To calculate the weighted average shares outstanding for the year, we need to determine the total number of shares outstanding at each point in time and weight them by the number of days they were outstanding. After performing the calculations, the weighted average shares outstanding for the year is approximately 299,180.33.
Explanation:To find the weighted average shares outstanding, we need to calculate the total number of shares outstanding at each point in time and weight them by the number of days they were outstanding.
On January 1, Milo Co. had 600,000 shares outstanding for the full year.
On May 1, Milo issued 126,000 shares, which were outstanding for 245 days (from May 1 to December 31).
On September 1, Milo purchased 63,000 shares of treasury stock, which were outstanding for 122 days (from September 1 to December 31).
So, the weighted average shares outstanding for the year is calculated as follows:
Weighted Shares Outstanding = (600,000 * 365) + (126,000 * 245) + (63,000 * 122)Total Weighted Days = 365 + 245 + 122Weighted Average Shares Outstanding = Weighted Shares Outstanding / Total Weighted DaysWeighted Average Shares Outstanding = (600,000 * 365) + (126,000 * 245) + (63,000 * 122) / (365 + 245 + 122)Weighted Average Shares Outstanding = 219,000,000 / 732Weighted Average Shares Outstanding ≈ 299,180.33Therefore, the weighted average shares outstanding for the year is approximately 299,180.33.
Matt, a supervisor, refuses to let female employees work on overtime assignments because hethinks it is unsafe for women to work after 6 p.m. The female employees decide to file a charge against Matt with the Equal Employment Opportunity Commission. This case is an example of ______.
A. reverse discrimination
B. a business necessity
C. retaliation
D. disparate impact
E. disparate treatment
Answer:
D. Disparate impact
Explanation:
The situation described in this case is a form of discriminatory practices whereby the female is assumed to be "weaker" by Matt the supervisors who says it's unsafe for women to work after 6pm. The situation by law is referred to as disparate impact. Disparate impact involves the unintentional discrimination of a protected group more than other group even tho the practices and rules appears to be neutral for both. In this case, the minority or protected group is said to receive unfavorable employment decisions like in the case we have here. The women here are receiving unfavorable employment decisions by not been allowed to work by time after 6pm.
In the short run, the costs associated with variable inputs are _____, and the costs associated with _____ inputs are _____. variable;
fixed;
fixed fixed;
fixed;
fixed variable;
fixed;
variable fixed;
fixed;
variable
Answer:fixed
Explanation: In the short run the rate at which some input being used are fixed and costs associated with these fixed inputs must be incurred regardless of the level of output produced. Other costs do different with the level of output produced by the firm during that period.
In the short run, variable input costs are variable, adapting to changes in production demand while fixed input costs remain constant, unaffected by production levels.
Explanation:In the short run, the costs associated with variable inputs are variable, and the costs associated with fixed inputs are fixed. Variable inputs refer to resources used in production that can be adjusted easily, such as labor or raw materials. If your production demands increase, you can easily hire more workers or buy more raw materials, and therefore, the costs associated with these inputs are variable in nature. Conversely, fixed inputs are resources with costs that don't change in the short run, irrespective of the level of output. For example, a factory building or machinery are fixed inputs, as their costs stay same irrespective of the production levels.
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What is implied if the inventory account has increased?
A. Cash flow from financing activities has decreased relative to net income.
B. Cash flow from operating activities has increased relative to net income.
C. Cash flow from operating activities has decreased relative to net income.
D. Cash flow from financing activities has increased relative to net income.
Answer:
C. Cash flow from operating activities has decreased relative to net income.
Explanation:
As we know that
Operating activities involves those activities that impact the after-net income working capital. This will subtract the rise in current assets and a reduction in current liabilities, while adding the decline in existing assets and a rise in current liabilities.
It will adjust some adjustments in working capital. In addition, the depreciation expenses are applied to the net profit and the loss on the selling of assets is added, while the gain on the sale of assets is deducted
Hence, the C option is correct
Pretax financial statement income for the year ended December 31, 2018, was $25 million for Scott Pen Company. Scott’s taxable income was $30 million. This was a result of differences between depreciation for financial reporting purposes and tax purposes. The enacted tax rate is 30% for 2018 and 40% thereafter. What amount should Scott report as the current portion of income tax expense for 2018?
a. $7.5 millionb. $ 9 millionc. $ 10 milliond. $ 12 million
Answer:
Option B $9 million is the correct answer.
Explanation:
The current portion of income tax expense is the taxable for the year multiplied by the prevalen tax rate in the year.
Current portion of income tax expense=taxable income*tax rate
taxable income is $30 million
tax rate is 30%
current portion of income tax expense=$30 million*30%=$ 9 million
Option B is the correct answer
However,if one chooses option A,it implies that one had used pretax net income of $25 million in computing the income tax expenses instead of taxable income on which tax is payable
Answer:
B. $ 9 million
Explanation:
Pretax financial statement income for the year ended December 31 2018
Scott’s taxable income $30 million
Enacted tax rate is 30% for 2018
Hence;
$30 million × 30% = $9 million
Therefore the amount Scott should report as the current portion of income tax expense for 2018 is $9 million
The following are true statements about distributive bargaining except:
a. It is confrontational and focused on the short term.
b. It can resolve disputes.
c. It tends to provide outcomes that satisfy all parties.
d. It often reduces the satisfaction of one or more negotiators.
Answer:
c. It tends to provide outcomes that satisfy all parties.
Explanation:
Base on the scenario been described in the question, distributive bargaining does all of the except that is doest not provide outcomes that satisfy all parties, the type of bargaining that satisfy both parties is integrative bargaining.
Distributive bargaining is an adversarial type of negotiation in which it is believed that if any gain of a competitor is a loss to the other party in the negotiation .
Distributive bargaining is when parties involved in a negotiation split a limited resource. It often leaves one or both parties unsatisfied contrary to statement 'c' which suggests all parties are satisfied.
Explanation:The subject of this question is distributive bargaining, a negotiation method in business where the parties involved split a limited resource, such as money. The statements listed above are mostly accurate with the exception of statement c: 'It tends to provide outcomes that satisfy all parties'. This is typically not the case with distributive bargaining, as it is a zero-sum game, meaning that the gain of one party corresponds to the loss of the other. Therefore, it often leaves one or both parties unsatisfied.
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A company ages its accounts receivables to determine its end of period adjustment for bad debts. At the end of the current year, management estimated that $28,750 of the accounts receivable balance would be uncollectible. Prior to any year-end adjustments, the Allowance for Doubtful Accounts had a credit balance of $505. What adjusting entry should the company make at the end of the current year to record its estimated bad debts expense?
Answer:
Debit : Bad Debts = $28,750
Credit : Allowance for doubtful debts = $28,750
Explanation:
An account for allowance for doubtful debts is a contra account created, predicting that certain debtors will not be able to pay for the goods and services they purchased. The amount may be based on historical experiences. Doubtful debts aren’t officially uncollectible, it is simply an estimation made, but bad debts are, where you have officially written off a certain accounts receivable as uncollectible.
An allowance for doubtful debts is recorded in the balance sheet, directly under accounts receivables. Bad debts are recorded as an expense in the income statement.
The entry to record the above transaction is:
Debit : Bad Debts = $28,750
Credit : Allowance for doubtful debts = $28,750
When the amount is officially declared uncollectible, the allowance for doubtful debts account will be debited and the accounts receivables account will be credited.
Certain brand names, such as Kleenex or Xerox, have become _______, because they are so commonly identified with a specific product category that consumers use these names to refer to any product in that category regardless of the manufacturer.
Answer: Certain brand names, such as Kleenex or Xerox, have become generic name.
Explanation:
Generic name is the term used to refer a product with its brand name rather than the product itself. Kleenex and Xerox are the brand names of the products. Xerox is photocopying product and Kleenex is the brand name for wet wipes. People commonly use the word Kleenex instead of tissues or wet wipes.
This process can be called as genericization and companies loose their trademarks due to these usage of names. These generic names have wide spread popularity.
Adding new channels in a multichannel distribution system provides the following advantage: It minimizes mass product customization. It expands market and sales coverage. It limits market complexity. It reduces marketing expenses. It reduces system controls.
Option B
Adding new channels in a multichannel distribution system provides the following advantage: It expands market and sales coverage.
Explanation:The multi-channel distribution management is a plan to accommodate customers with various ways to acquire the identical product. When brands put their stock in the pathway of customers who require them, whether in-store or online, sales, display, and customer reach will develop.
To manage a successful multi-channel distribution program, each companion must profit from the association. Enhanced coordination, in turn, generates the sought-after advantage of a multi-channel strategy: improved sales. Handling multiple types of channels can verify challenging.
________ refers to the means by which firms attempt to inform, persuade, and remind consumers-directly or indirectly-about the products and brands they sell. A. Planning B. Financial management C. Human resource development D. Marketing communications
Answer:
Marketing Communications
Explanation:
Final answer:
Marketing communications refers to the means by which firms attempt to inform, persuade, and remind consumers about the products and brands they sell. It involves methods such as advertising, public relations, sales promotions, and direct marketing.
Explanation:
Marketing communications refers to the means by which firms attempt to inform, persuade, and remind consumers-directly or indirectly-about the products and brands they sell. It is a crucial aspect of a company's marketing strategy and involves various methods such as advertising, public relations, sales promotions, and direct marketing.
For example, advertising is a form of marketing communication that aims to increase the likelihood that consumers consider a firm's product or service. Through advertisements, companies inform and educate potential customers about their offerings, influencing their purchasing decisions.
Marketing communications are an essential part of creating brand awareness, generating sales, and building relationships with customers. It helps companies reach their target audience, convey their value proposition, and differentiate themselves from competitors.
You would like to use the fixed-time-period inventory model to compute the desired order quantity for a company. You know that vendor lead time is 5 days and the number of days between reviews is 7. Which of the following is the standard deviation of demand over the review and lead time if the standard deviation of daily demand is 8
A. About 27.7
B. About 32.8
C. About 35.8
D. About 39.9
E. About 45.0
Answer: A.) About 27.7
Explanation:
Lead time = 5 days
Number of days between review = 7 days
Standard deviation of daily demand = 8
Standard deviation over review and lead time is given by:
Sqrt [(lead time + number of days between reviews) × standard deviation of daily demand ^2]
Sqrt [(5 + 7) × 8^2]
Sqrt[ 12 × 64]
Sqrt (768)
= 27.7
Standard deviation over review and lead time is about 27.7
Which of the following is NOT true? (Present values are calculated from the end of the life of the option to the beginning.) A. An American put option is always worth less than the present value of the strike price B. A European put option is always worth less than the present value of the strike price C. A European call option is always worth less than the stock price D. An American call option is always worth less than the stock price
Answer:
A.An American put option is always worth less than the present value of the strike price
Explanation:
Put option refers to a stock market instrument which gives the holder an option to sell an asset at an agreed price on or before a particular date.
Each contract covers around 100 shares for stock options.
An American call option provides the holder with the right to purchase an asset, while a put option provides the holder an option to sell it.
A European option can be implemented only at the expiration date of the option and an American option can be implemented at any time before the expiration date.
An American put option is always worth less than the present value of the strike price.
So, option A. is correct
The statement that is false among the given options is C. A European call option being always worth less than the stock price. The value of a European call option is dependent on various factors like the strike price, time to maturity, risk free rate, and volatility of the return on the underlying asset.
Explanation:The statement that is not true among the provided selections is: C. A European call option is always worth less than the stock price. It's necessary to note that the worth of a European call option is not always less than the stock price. It's contingent on several factors, which include the price of the strike, the time to maturity, the risk free rate, and the volatility of the return on the underlying asset.
In contrast, statements A, B, and D are quite often true in various circumstances. For instance, both an American and European put option are typically worth less than the present value of the strike price, because these options only gain value if the stock price falls below the strike price. Similarly, an American call option is generally worth less than the stock price, although there are specific exceptions to this as well.
Keep in mind that options and their values are a complicated subject in finance, dependent on a multitude of varying factors.
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