A Call Option on Australian Dollars Has a Strike (Exercise)

question 96

Multiple Choice

A call option on Australian dollars has a strike (exercise) price of $.56. The present exchange rate is $.59. This call option can be referred to as:

• A) in the money.
• B) out of the money.
• C) at the money.
• D) at a discount.

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Definitions:

Cash-Basis Accounting

An accounting method where revenues and expenses are recorded when cash is received or paid, as opposed to when they are incurred.

Depreciation

An accounting method of allocating the cost of a tangible asset over its useful life to account for declines in value over time.

Wages

Amounts paid to employees based on a rate per hour or on a piecework basis.

Rent Expense

An expense account detailing the cost incurred for the use of rental property or equipment.