You Own a Call Option with Time to Expiration

question 10

Multiple Choice

You own a call option with time to expiration. The common stock is selling for $15 and your exercise price is $12, this option:

• A) must be sold to the writer.
• B) is in-the-money.
• C) is out-of-the-money.
• D) must be offset by a put.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor.

Direct Labor Hours

The total hours of labor spent by workers who are directly involved in the manufacturing process of a product.

Overapplied Manufacturing Overhead

Occurs when the allocated amount for manufacturing overhead costs exceeds the actual overhead costs incurred.

Raw Materials

Raw materials are the basic, unprocessed inputs used in the manufacturing of goods, including items like minerals, chemicals, or agricultural products essential for production processes.