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pantera1 [17]
3 years ago
10

Consider an exchange-traded call option contract to buy 500 shares with a strike price of $40 and maturity in four months. Expla

in how the terms of the option contract change when there is a) A 10% stock dividend b) A 10% cash dividend c) A 4-for-1 stock split
Business
1 answer:
kvasek [131]3 years ago
3 0

Answer:

The explanation of the terms of the option contract change is below

Explanation:

a. Every call option contract will cover more shares

= 500 × 1.1

= 550

for computing the 1.1 (1 + 10%)

The strike price will be reduced for each share to

= 40 ÷ 1.1

= $36.364

b. Cash dividend would not adjust the terms of the contract but the contract value would decrease if it is an option to call and increase if it is an option to place

c. Each contract call option will cover more shares

= 500 × 4

= 2,000

The strike price will be reduced for each share to 40 ÷ 4  

= $10

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Morris Company applies overhead based on direct labor costs. For the current year, Morris Company estimated total overhead costs
kogti [31]

Answer:

Option d ($20,000 Debit balance) is the appropriate option.

Explanation:

The given values are:

Total overhead costs,

= $400,000

Direct labor costs,

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Actual overhead incurred,

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Actual direct labor costs,

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Then,

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<u>Solution:</u>

Let  x be the number of emails originally sent.

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