Answer:
d. If Cazden's stock price rose by $5, the exercise value of the options with $25 strike price would also increase by $5.
Explanation:
A call option confers a right, not an obligation upon the call buyer to buy a security at a pre determined price, known as exercise price or strike price at a future date.
A call buyer would exercise his right only in the scenarios wherein the strike price is lesser than the current market price on maturity.
Profit of a call buyer is given by = CMP as on expiry - Exercise/Strike price - Option premium paid
wherein CMP= Current Market Price
A call option is "in the money" when it's strike price is less than it's current market price. In the given case, it means if the CMP today represents CMP upon expiry, call buyer would exercise his right and his gain would be $5 i.e $30 - $25.
Since the $25 exercise option is "in the money", an increase in stock price by $5 will also increase the strike price by $5.
- Direct costs are a price that can be linked directly to the manufacturing of certain goods or services.
- The cost object can be connected directly to a service, product, or department.
- Direct expenses often vary from different production levels, such example, inventories, which implies that they vary.
- Direct costs vary in expenses directly related to variable manufacturing costs With a production unit With production unit, fixed costs do not fluctuate.
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Answer:
Learning effects occur over time, whereas economies of scale are captured at one point in time when output is increased.
Explanation:
Learning effect is defined as as the process by which education results in increased productivity and in turn higher wages. This process takes time because most specialised skills need to be learnt in a formal institution over time.
Economies of scale is defines as cost reduction that a company experiences when there is an increase in production. Fixed cost realised can be spread over a larger number of produced units. Economies of scale is captured at one point in time when output is increased.
As we use much more of a product, we experience a diminishing marginal utility.
<u>Explanation:
</u>
The Law of Marginal Benefit Declining says that somehow the marginal use of each extra unit declining rises as consumption. The limited utility is generated as the utility shift is absorbed by a supplementary unit. Utility is an economic principle used to describe pleasure or satisfaction.
For example, a person may purchase a certain brand of chocolate for a little while. Soon, they may buy too little and choose another type of chocolate or buy cookies alternatively, because the fulfilment they initially received from chocolate is declining.
Answer:
b. a credit to rent expense for $13,500
Explanation:
The computation is shown below:
Since there is an advance rent for $18,000 on Jan 1 and the adjusting entry would be made on March 31
So, the amount would be
= $18,000 - $18,000 × 3 months ÷ 12 months
= $18,000 - $4,500
= $13,500
This amount i.e $13,500 would be credited to rent expense
Hence, the second option is correct
