A Stock Is Selling at $85 at the Expiration of an Option

question 13

Multiple Choice

A stock is selling at $85 at the expiration of an option contract. Which one of the following options on the stock will most likely be exercised?

• A) Call option with exercise price of $65
• B) Put option with exercise price of $65
• C) Call option with exercise price of $85
• D)Put option with exercise price of $85

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Definitions:

Time Variance

The difference between the planned amount of time to complete a project or task and the actual time taken.

Total Cost Variance

The difference between the actual cost and the standard or expected cost of goods or services produced over a given period.

Standard Cost

A predetermined cost of manufacturing a product or providing a service, used for budgetary and inventory purposes.

Price Variance

The difference between the standard cost of a product or service and its actual cost, used in budgeting and financial analysis.