What Is the Call Option Premium Given the Following Information

question 55

Multiple Choice

What is the call option premium given the following information?

• A)$4.63
• B)$5.28
• C)$6.39
• D)$7.60
• E)$8.66

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Definitions:

Contribution Margin Ratio

The percentage of each sales dollar that remains after variable costs are subtracted, contributing to covering fixed costs and profit.

Margin Of Safety Ratio

A financial metric that indicates how much sales can decline before a business reaches its break-even point.

Costs And Expenses Ratio

A financial metric that compares the costs and expenses of a company to its total revenue, indicating the efficiency of its operations.

Variable Costs

Costs that change in proportion to the good or service that a business produces, such as raw materials and direct labor.