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kaheart [24]
2 years ago
12

When an investor buys a call option, regardless of whether it is an Equity or Stock Index option, the maximum risk or loss poten

tial to the investor is the(A)premium that was paid for the contract plus any out-of-the-money amount(B)premium that was paid for the contract less the in-the-money amount(C)premium that was paid for the contract(D)exercise price on the contract plus the premium paid for the contract
Business
1 answer:
kompoz [17]2 years ago
7 0

Answer:

C) premium that was paid for the contract

Explanation:

One interesting feature of buying option is that you can only lose the premium.

For example: If i buy the call option for $5 with a strike price of $30. At the expiration date when the stock price is $22, i would have lost more than $5 by exercising the option. The reason is i am purchasing the stock in $30 which can be bought from market in $22. Here, it would not be the case because unlike futures, options can be left not exercised. So, in this condition i will not exercise the option, and buy the stock from market in $22. Maximum i would lose is the premium that i have paid for the option $5.

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On July 15, 2021, the Nixon Car Company purchased 2,100 tires from the Harwell Company for $40 each. The terms of the sale were
SOVA2 [1]

Answer:

The journal entries are shown below:

Explanation:

The journal entries are shown below:

On July 15

Purchases (2,100 × $40)      $84,000

          To Accounts Payable    $84,000

(Being the purchase is recorded)

On July 23

Account payable $84,000

           To Purchase discount  $2,520   ($84,000 × 3%)

            To Cash $81,480

(Being the payment is recorded)

On August 15

Account payable $84,000

   To cash $84,000

(Being the payment is recorded)

7 0
3 years ago
Fixed vs Variable cost preference. Bates operates a kiosk at a local mall, selling duck calls for $30 each. The variable cost to
GuDViN [60]

Answer:

Option 2 should be selected

Explanation:

Using a rational approach which option most benefit and have a minimum cost. We will use the break-even level here to decide which option should be selected.

Option 1

Price per call = $30

Variable cost per call = $18

Contribution = Sales  - Variable cost = $30 - $18 = $12

Fixed Cost = $15,000

Break-even point = Fixed cost / Contribution per call = $15,000 / $12 = 1,250 calls

Option 2

Price per call = $30

Variable cost per call = $18 + ( $30 x 10% ) = $18 + $3 = $21

Contribution = Sales  - Variable cost = $30 - $21 = $9

Fixed Cost = $9,000

Break-even point = Fixed cost / Contribution per call = $9,000 / $9 = 1,000 calls

Difference  = 1,250 calls - 1,000 calls = 250 calls

Option 2  is better option because it take 250 less calls to reach at break-even in the month. It should be selected.

8 0
2 years ago
When a company makes a decision to purchase a component part instead of manufacturing it in house, that decision is based primar
Vedmedyk [2.9K]

Answer:

When a company makes a decision to purchase a component part instead of manufacturing it in house, that decision is based primarily on<u> managerial accounting information</u> information.

Explanation:

8 0
3 years ago
Scoring: Your score will be based on the number of correct matches. There is no penalty for incorrect or missing matches. Match
slega [8]

Answer and Explanation:

The matching is as follows:

1. Dividends = A. Stockholders' Equity

2. Prepaid Insurance = D. Assets

3. Unearned Rent = E. Liabilities

4. Fees Earned = B. Revenue

5. Patents = D. Assets

In this way it should be matched

Like the dividend is come under equity so it is shown under stockholder equity

likewise it is applied for the other items

6 0
3 years ago
- How would demand have to change for a price change to be unitary elastic?​
marusya05 [52]

Answer:

The percentage change in quantity demanded is exactly equal to the percentage change in price. The percentage change in quantity demanded is exactly equal to the percentage change in price.

8 0
2 years ago
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