Exhibit 13-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S)

question 11

Multiple Choice

Exhibit 13-8
USE THE FOLLOWING INFORMATION FOR THE NEXT PROBLEM(S) $\begin{array}{c}\quad\quad\quad\quad\text { XYZ CORP }\\\begin{array}{cccc}\hline &{ \quad\quad\quad\text { EXERCISE } } & & { \quad\quad\quad\text { NYSE } } \\\hline&\text { DATE } & \text { PRICE } & \text { PRICE } & \text { CLOSE } \\\hline \text {CALLS } & \text { OCT } & 85 & 163 / 4 & 10111 / 16 \\&\text { OCT } & 90 & 12 & 10111 / 16 \\&\text { OCT } & 95 & 75 / 8 & 10111 / 16 \\ \text { PUTS } &\text { OCT } & 85 & 1 / 8 & 10111 / 16 \\&\text { OCT } & 90 & 3 / 8 & 10111 / 16 \\&\text { OCT } & 95 & 13 / 16 & 10111 / 16\end{array}\end{array}$
-Refer to Exhibit 13-8. If you establish a long straddle using the options with an 90 exercise price, what is your dollar gain or loss if at expiration XYZ is still trading at 101 11/16?

• A) $68.75 loss
• B) $68.75 gain
• C) $37.50 loss
• D) $1,200.00 loss
• E) $1,200.00 gain

Analyze the effects of cash collections and sales discounts on financial statements.

Perform bank reconciliations and understand their importance for internal control over cash.

Calculate net realizable value of receivables and understand its significance in financial reporting.

Understand the impact of sales returns, allowances, and credit card discounts on gross profit calculation.

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