Braddock Construction Co

question 5

Multiple Choice

Braddock Construction Co.'s stock is trading at $20 a share.Call options that expire in three months with a strike price of $20 sell for $1.50.Which of the following will occur if the stock price increases 10%, to $22 a share?

• A) The price of the call option will increase by more than $2.
• B) The price of the call option will increase by less than $2, and the percentage increase in price will be less than 10%.
• C) The price of the call option will increase by less than $2, but the percentage increase in price will be more than 10%.
• D) The price of the call option will increase by more than $2, but the percentage increase in price will be less than 10%.
• E) The price of the call option will increase by $2.

---

Definitions:

Balance

The difference between the total debits and credits in an account, or the equilibrium between two opposing forces or aspects.

Revaluation Surplus

This is the increase in value of an asset after it has been appraised again and is recorded as a gain in equity under a company's financials.

IFRS

International Financial Reporting Standards, a set of accounting standards developed by the International Accounting Standards Board (IASB) that guide the preparation of financial statements globally.

Fair Value

The amount of money one would expect to obtain from selling an asset or the cost incurred to settle a liability, during a structured exchange between parties in the market, as of the valuation date.