Exhibit 14-1 THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)

question 36

Multiple Choice

Exhibit 14-1
THE FOLLOWING INFORMATION IS FOR THE NEXT PROBLEM(S)
A stock currently trades for $130 per share. Options on the stock are available with a strike price of $125. The options expire in 10 days. The risk free rate is 3% over this time period, and the expected volatility is 0.35.
-Refer to Exhibit 14-1. Calculate the price of the put option.

• A) $1.086
• B) $0.862
• C) $6.234
• D) $0.623
• E) $2.317

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Definitions:

Special Acquisition Fees

Costs specifically related to acquiring an asset or a group of assets, other than the purchase price.

Units-of-Activity Method

A depreciation method that allocates expense based on the number of units produced or the use of the asset over time.

Depreciation Expense

A measure of the wearing out, consumption, or other loss of value of a depreciable asset arising from use, effluxion of time, or obsolescence through technology and market changes.

Allocation of Cost

The process of assigning a cost or group of costs to one or more cost objectives, such as projects, functions, or departments.