TABLE 7.1 Use the Table to Answer Following Question(s)

question 28

Multiple Choice

TABLE 7.1
Use the table to answer following question(s) .
April 19, 2009, British Pound Option Prices (cents per pound, 62,500 pound contracts) .

-Refer to Table 7.1. The exercise price of ________ giving the purchaser the right to sell pounds in June has a cost per pound of ________ for a total price of ________.

• A) 1460; 0.68 cents; $425.00
• B) 1440; 1.06 cents; $662.50
• C) 1450; 1.02 cents; $637.50
• D) 1440; 1.42 cents; $887.50

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Definitions:

Reversing Entries

Entries made in accounting to reverse or cancel out adjusting entries made at the end of a reporting period, often used to simplify recordkeeping.

External Transactions

Financial transactions between a business and an outside party, which can include buying from or selling to another company.

Retained Earnings

The portion of net income that is not distributed to shareholders as dividends, but rather kept by the company for reinvestment in its operations or to pay debt.

Closing Process

The accounting procedures used to close out business accounts at the end of an accounting period.