You Paid $5 a Call Option on a Stock with an Exercise

question 87

Multiple Choice

You paid $5 a call option on a stock with an exercise price of $80.If the current stock price is $60, your net proceeds by exercising this option and selling the stock will be:

• A)($25).
• B)$0.
• C)$20.
• D)$60.

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Definitions:

Direct Labor

The labor costs directly associated with the production of goods, such as wages for workers on the manufacturing line.

Direct Materials

Raw materials that are directly used in the manufacturing of a product and can be directly traced to the goods being produced.

Manufacturing Overhead

All indirect costs associated with the production process, such as utilities, maintenance, and salaried labor, that are not directly tied to individual products.

Manufacturing Costs

Costs that are directly associated with the manufacturing of products, such as the cost of raw materials, workforce, and overhead expenses.