You Own One Call Option with an Exercise Price of €30

question 18

Multiple Choice

You own one call option with an exercise price of €30 on Nadia Interiors.This is currently selling for €27.80 a share but is expected to increase to either €28 or €34 a share over the next year.The risk-free rate of return is 5% and the inflation rate is 3%.What is the current value of your option if it expires in one year?

• A)€0.76
• B)€0.79
• C)€0.89
• D)€0.92
• E)€0.95

Identify the significance and effects of dividend yield and price-earnings ratio on stock valuation.

Comprehend the process of stock issuance and the valuation of non-cash assets received in exchange for stock.

Understand the concept of retained earnings, including restricted retained earnings and retained earnings deficit.

Grasp the accounting and financial implications of declaring and paying dividends on stockholders’ equity and retained earnings.

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Definitions:

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The quality of being brief and to the point, avoiding unnecessary words or details.

Effective Headings

Titles or captions used to capture attention and organize content in a clear and concise manner.

Business Documents

Written records that are used in the operation and management of a business, including reports, memos, proposals, and contracts.