Sanford,Inc

question 65

Multiple Choice

Sanford,Inc. ,enters into a call option contract with Sons Investment Co.on January 2,2014.This contract gives Sanford the option to purchase 1,000 shares of MAX stock at $100 per share.The option expires on April 30,2014.MAX shares are trading at $100 per share on January 2,2014,at which time Sanford pays $400 for the call option.The $400 paid by Sanford,Inc. ,to Sons Investment is referred to as the

• A) option premium.
• B) notional amount.
• C) strike price.
• D) intrinsic value.

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Definitions:

Chapter 7

A provision under the U.S. Bankruptcy Code that provides for the liquidation of a debtor's assets to repay creditors.

Voluntary Petition

A document filed by an individual or business in a bankruptcy court to initiate bankruptcy proceedings voluntarily.

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Steps taken within the judicial system to enforce or defend rights through lawsuits or litigation.

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A formal request filed by an individual or business entity to declare bankruptcy, initiating the legal process to discharge or reorganize debt.