A Stock Is Trading at $132 $- 30.53$ the Passage of One Trading Day

question 29

Multiple Choice

A stock is trading at $132. A one-month call with a strike of $125 costs $9.773 and has a theta of $- 30.53$ . The passage of one trading day ( $\approx 0.004$ years) will cause the call value to, approximately,

• A) Rise by \(0.04\) .
• B) Fall by \(0.003\)
• C) Fall by \(0.122\) .
• D) Fall by \(0.04\)

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Definitions:

Static Planning Budget

A budget based on a fixed level of activity and not adjusted for actual activity levels.

Flexible Budget

A report showing estimates of what revenues and costs should have been, given the actual level of activity for the period.

Revenue Variance

The difference between the actual revenue earned by a business and its expected (or budgeted) revenue, which can be favorable or unfavorable.

Sales Revenue

The income received by a company from its sales of goods or the provision of services before any expenses are deducted.