Suppose You Purchase the November Call Option on Orange Juice

question 8

Multiple Choice

Suppose you purchase the November call option on orange juice futures with a strike price of 150 at the price shown in the table below. What will be your profit or loss on this contract if the price of orange juice futures is $0.616 per pound at expiration of the option contract?
Futures Options
Orange juice:
15,000 lbs, U.S. cents per lb.

• A)loss of $2,107.50
• B)loss of $1,717.50
• C)no profit or loss
• D)profit of $1,717.50
• E)profit of $2,107.50

Understand how to calculate total direct labor cost variance.

Understand how to prepare a factory overhead cost variance report.

Understand how to prepare an income statement including variance analysis.

Understand the concept and purpose of budgets in organizations.

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Definitions:

Slope

A measure of the steepness or incline of a line, representing the ratio of the change in the y-value to the change in the x-value.

Coefficient of Correlation

A statistical measure that computes the strength and direction of a linear relationship between two variables.

Direction

The course along which someone or something moves, or a particular position or orientation regarding space or time.

Coefficient of Correlation

A numerical measure that denotes the strength and direction of a linear relationship between two variables.