Which of the Following Is Correct for the Owner of a June

question 25

Multiple Choice

Which of the following is correct for the owner of a June call,valued at $3,on XYZ Corp.with a strike price of $60? XYZ Corp.currently trades at $55.

• A) XYZ is expected to go to $63 per share.
• B) The option cannot currently be exercised.
• C) The option owner's current profit is $3 per share.
• D) The option may expire without value.

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Definitions:

Long-Term Liability

Financial obligations of a business that are due more than one year in the future.

Adjusting Entries

Accounting record entries created at the conclusion of an accounting cycle to assign revenues and expenses to the time they truly took place.

Reversing Entries

At the start of a new accounting period, entries are recorded to negate or undo the adjustments that were made at the conclusion of the prior period.

Salaries Expense

The total amount paid to employees for services rendered during a specific period, recorded as an expense on the income statement.