You Own a Call Option on Jasper Co

question 82

Multiple Choice

You own a call option on Jasper Co.stock that expires in one year.The exercise price is $35.The current price of the stock is $48 and the risk-free rate of return is 4.5 percent.Assume the option will finish in the money.What is the current value of the call option per share?

• A)$13.00
• B)$13.59
• C)$13.97
• D)$14.51
• E)$15.46

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Definitions:

Variable Overhead

Variable overhead refers to costs that change in proportion to the production activity or business operations levels, such as utilities or materials.

Direct Materials

Ingredients that are identifiable in the production process of a product and serve as fundamental elements of the end product.

Direct Labor-Hours

The overall hours dedicated by workers who are directly contributing to the production line.

Variable Overhead

Costs that vary with the level of production output, such as utilities for manufacturing equipment, which are not fixed.