Use the Table for the Question(s)below

question 26

Essay

Use the table for the question(s)below.
Consider the following information on options from the CBOE for Merck:
-You have decided to sell (write)five January 2009 put options on Merck with an exercise price of $45 per share.How much money will you receive and are these contracts in or out of the money?

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Definitions:

Significant Influence

The power to participate in the financial and operating policy decisions of an investee, but not control them, typically associated with ownership of 20%-50% of voting stock.

IAS 28

An International Accounting Standard that prescribes the accounting for investments in associates and sets the requirements for the application of the equity method when accounting for investments in associates and joint ventures.

Non-Strategic Investments

Investments made by a company that are not part of its core operations or strategic plan.

Significant Influence Investments

Investments where the investor has the power to participate in the financial and operating policy decisions of the investee but does not control or jointly control the entity.