You Purchased a Call Option with an Exercise Price of $50

question 72

Multiple Choice

You purchased a call option with an exercise price of $50 and a premium of $6. If you exercise the option when the stock price is $60, your net proceeds will be:

• A) $4.
• B) $0.
• C) $10.
• D)$16.

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Definitions:

Merchandise Inventory

The goods available for sale to customers in retail or wholesale businesses, valued at lower of cost or market value on the balance sheet.

Credit Sales

Transactions where goods or services are provided to a customer with an agreement to pay at a later date.

Operating Expenses

Expenses related to the normal operations of a business, excluding the cost of goods sold.

Direct Labour Budget

A budget that forecasts the expense of direct labor needed to achieve manufacturing targets.