A Stock Is Currently Priced at $44 a Share While

question 5

Multiple Choice

A stock is currently priced at $44 a share while the $45 call option is priced at $1.22.The call option delta is .86.What is the approximate call price if the stock increases in value to $45?

• A)$0.12
• B)$0.26
• C)$0.96
• D)$1.98
• E)$2.08

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Definitions:

Manufacturing Overhead Applied

The portion of manufacturing overhead costs allocated to each unit of production based on a predetermined rate.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold by a company, including materials, labor, and manufacturing overhead.

Underapplied

Refers to a situation where the allocated manufacturing costs are less than the actual manufacturing costs incurred.

Overapplied

A situation in accounting where the allocated manufacturing overhead cost is more than the actual overhead incurred.