You Own Two Call Option Contracts on ABC Stock with a Strike

question 60

Multiple Choice

You own two call option contracts on ABC stock with a strike price of $15.When you purchased the shares the option price was $1.20 and the stock price was $15.90.What is the total intrinsic value of these options if ABC stock is currently selling for $13.50 a share?

• A)-$280
• B)-$180
• C)$0
• D)$100
• E)$180

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Definitions:

Activity Rates

Predetermined rates used in activity-based costing to allocate costs to products or services based on their consumption of activities.

Direct Labor Hours

The total hours worked by employees directly involved in the manufacturing process or providing services, used in calculating production costs or rates.

Product-level Costs

Costs that can be directly attributed to a specific product, including materials and direct labor costs.

Units

Basic measures or quantities used to express a variable, item, or the extent of a service or product used in transactions.