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:

Demand Elastic

Refers to the degree to which demand for a good or service varies with its price. High elasticity indicates demand changes significantly with price changes, while low elasticity indicates little to no change.

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit.

Total Variable Cost

The aggregate of all variable costs that are incurred for a particular level of output or production.

Total Annual Fixed Costs

The sum of all business expenses that are constant and do not change with the level of production within the year.