23-89 Given the Exercise Price of the Option,what Premium Should

question 81

Multiple Choice

23-89 Given the exercise price of the option,what premium should be paid for this option?

• A)$0.2143 per $100 of bond option purchased.
• B)$0.4420 per $100 of bond option purchased.
• C)$1.2768 per $100 of bond option purchased.
• D)$0.2321 per $100 of bond option purchased.
• E)$1.1652 per $100 of bond option purchased.

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Definitions:

Permanent Earnings

The portion of a company's income considered to be sustainable and repeatable, excluding one-time events or accounting anomalies.

Continuing Operations

Parts of a business expected to continue operating and contributing to earnings over the long term, excluding any discontinued operations.

Discount Rate

The interest rate used to discount future cash flows of an investment to their present value, thereby assessing its attractiveness.

Financial Attribute

Characteristics or features of a financial nature that can be used to analyze or assess the financial position or performance of an entity.