On April 4, Alam Company Purchased a Call Option on 10,000

question 44

Multiple Choice

On April 4, Alam Company purchased a call option on 10,000 bushels of corn with delivery on June 30. The strike price is $2.15 per bushel. The value of the option and the market value of the corn are as follows.

• A)On April 4, the intrinsic value of the option is $1,100.
• B)On April 30, the time value of the option is $1,010.
• C)On May 31, the intrinsic value of the option is $230.
• D)On June 30, the time value of the option is $2,700.

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Definitions:

Independent Variable

A variable that is manipulated or changed in an experiment to determine its effect on the dependent variable.

Room Temperature

A general description of a comfortable indoor environment, typically considered to be around 20°C (68°F) to 22°C (72°F).

Noise Level

The measurement of the ambient level of sound, often referring to the background sound present in a given environment.

Internal Validity

The degree to which a study’s results are attributable to the independent variable, rather than other factors, indicating the study accurately reflects the relationship being tested.