Underlying Stock Price: 45

question 248

Multiple Choice

Underlying stock price: 45.80 You want to purchase one October 45 call contract on Glaxo stock. The option contract will cost you _______________. (Ignore transactions costs.)

• A) $30.00
• B) $100.00
• C) $280.00
• D) $430.00
• E) $900.00

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Definitions:

Equivalent Units

A measure used in cost accounting to express the amount of work done on incomplete units in terms of complete units.

First-in

Commonly part of the term "First-in, First-out (FIFO)", a method used in inventory management where the oldest stock is sold first.

Labor

Work performed by humans that is used in the production of goods and services.

Equivalent Unit

A metric in cost accounting that quantifies the effort invested in partially finished units by equating it to the output of completely finished units.