A kind of surplus that might be created by the minimum wage is a labor surplus. A labor surplus occurs when the supply of workers willing to work at or above the minimum wage exceeds the demand for workers at that wage level.
A surplus created by the minimum wage can refer to an economic concept where the supply of labor exceeds the demand for labor, resulting in a surplus of workers who are unable to find employment. In this context, a minimum wage that is set above the market equilibrium can create a surplus of labor, as employers may not be willing to hire as many workers at the higher wage rate.
For example, if the minimum wage is increased significantly, employers may be forced to reduce their workforce or adjust their business practices to account for the higher wage costs. This can lead to a situation where there are more workers seeking employment than there are available jobs, creating a surplus of labor.
The potential for a surplus created by the minimum wage is a contentious issue in the ongoing debate over the economic impact of minimum wage policies. Supporters argue that the benefits of higher wages for low-income workers outweigh the potential costs, while opponents argue that it can lead to increased unemployment and decreased economic efficiency.
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An economy produces ceramic plates. If the economy achieves allocative efficiency ______.
An economy produces ceramic plates. If the economy achieves allocative efficiency it produces the quantity on the PPF that is valued most highly.
If an economy is productive, then it must be allocatively efficient?An "ideal mix" of goods is produced by an allocatively efficient economy.In a perfect market, a firm is efficient whenever its price (P = MC) equals its marginal costs.
When businesses generate goods and services, is allocative efficiency achieved?Market equilibrium is reached when a specific quantity of a given good or service meets all of society's needs.Therefore, allocative efficiency occurs when the quantity of products and services produced is relatively near to what society desires.
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Alice loves all animals and is starting a new grooming business for dogs. She believes that animals are very important and plans to exceed any applicable regulations regarding cleanliness and health standards. Alice thinks some local regulations make no sense. For example, there is a local ordinance that all dogs must be kept on a leash at all times when not in a fenced area. Although Alice lives on a large lot with plenty of room for dogs to run free, she plans to obey the leash regulation and all others. She is aware, however, that members of the community have had success in changing local regulations by petitioning city council. Alice plans to proceed in that manner to attempt a change in the leash law. Alice's idea that dogs have basic rights, and her plan to exceed laws involving cleanliness and health standards is rooted in which of the following?A. Legal positivism.
B. The historical school.
C. Legal realism.D. Natural law.
E. Cost-benefit analysis.
Answer:
D. Natural law.
Explanation:
As a concept, natural law states that everyone, including people, animals and all other living things, e.g. trees, have God given or natural rights. These rights include our right to live and be free, and are not established by any law created by humans, instead we (and the rest of living creatures) are born with them. Laws made by human societies have no right to interfere or break natural laws, since natural laws are the basis of all other laws.
Some people believe that natural law only applies to humans, but others, e.g. ecologists and animal lovers, believe that they apply to all living creatures.
Which of these statements is true:
1) It is not uncommon for most of the people in the top 5 percent of income-earners
to be 45 years old and up.
2) Three-quarters of those American works who were in the bottom 20 percent in
income in 1975 were also in the top 40 percent at some point over the next 16 years.
O Only #2
ONeither is true
O Both are true
O Only #1
In these statements It is not uncommon for most of the people in the top 5 percent of income-earners to be 45 years old and up, Three-quarters of those American works who were in the bottom 20 percent in income in 1975 were also in the top 40 percent at some point over the next 16 years. Both are true. Option (c) is correct.
What do you mean by Income?The amount of money, property, and other transfers of value obtained over a predetermined period of time in return for services or goods are often referred to as "income." Income is defined in accordance with the context in which the word is employed.
The stark disparity between the wealthy, who controlled a third of all wealth, and the poor, who had no savings at all, contributed to the Great Depression. Many people lost their fortunes as the economy deteriorated, and some members of high society were pressured to scale back their opulent lifestyles.
High levels of income inequality are associated with financial crises, debt, inflation, and economic instability.
Therefore, Option (c) is correct. Both are true.
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WILL BE MARKED BRAILIEST!!
3.A company sees that sales of its speakers have decreased over the past
120 days. Its most likely option is to first
design a market research plan
visit some stores selling the product
stop production of the product
lower prices and see what happens
Answer:
They company goes out of business?
Explanation:
Aptitudes might take years of training.
True
False
Answer:
true
Explanation:
Answer:
The correct answer is False
Explanation:
Got it right on the quiz.
Department of Accounting, Finance \& Banking EXPO Ltd, a UK resident trading company produced the following results for the year ended 31 March 2022. There were capital losses of £9,000 brought forward on 1 April 2021. Required: How much investment income (non-trade loan relationship income) should be included in the taxable total profits? What are the taxable total profits? (1 12
The non-trade loan relationship income is £16,000 and the taxable total profits are £247,000.
The calculation of non-trade loan relationship income and taxable total profits based on the given data is shown below:
Calculation of non-trade loan relationship income:
There are capital losses of £9,000 brought forward on 1 April 2021.
Investment income = Interest on bank deposits + Dividend received from investments (if any) = 16,000 + 0 (as no dividend income is given) = 16,000
Therefore, non-trade loan relationship income for the year ended 31 March 2022 is £16,000.
Calculation of taxable total profits: ParticularsAmount (£) Trading income £360,000
Less: Cost of sales(120,000) Gross profit £240,000
Add: Investment income16,000
Less: Capital losses brought forward(9,000) Total taxable profits £247,000
Therefore, the non-trade loan relationship income is £16,000 and the taxable total profits are £247,000.
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Nike is the quintessential example of a global operator, as it owns factories all over the world. True False
The statement "Nike is the quintessential example of a global operator, as it owns factories all over the world" is True because Nike is global operator .
Nike is a well-known global operator, owning and operating factories in various countries to manufacture their products, thus exemplifying a global business model. Nike is a global company with a presence in many countries around the world, and it operates in a variety of ways. One of those ways is through owning factories in various locations to manufacture its products.
By owning factories, Nike has more control over the production process and can potentially save costs in the long run. However, owning factories in different countries also requires Nike to navigate various regulatory and labor laws, as well as cultural differences and other challenges that come with operating in different parts of the world. Overall, Nike's global strategy has been successful, and it remains one of the most recognizable and profitable brands in the world.
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_______ are small groups of consumers who interact directly and informally with product designers without a moderator present.
Immersion groups are small groups of consumers who interact directly and informally with product designers without a moderator present.
The term immersion marketing or immersive marketing includes traditional advertising, public relations, word-of-mouth advertising, digital marketing, samples, coupons, retail partnerships, and other ways of surrounding the consumer with a consistent message about a brand.
In essence, immersion marketing envelopes a brand or product, or company issue so that the marketing, advertising, and public relations departments or representatives work holistically towards delivering the same brand message across multiple distribution channels. Unlike "Shotgun marketing"(communicating the message to anyone who listens), immersive marketing is cheaper and more effective, focusing directly on the customer's needs.
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I need help with this
Answer:
B. Someone new contributes money to the company, becoming an owner.
Explanation:
Common stocks or shares represent a portion of the company. Ownership of a share means owning a part of the company. Shares are also known as equity.
A company issues common stocks when it wants to raise additional capital. Anyone buying shares is contributing capital to the business. They become owners of the business or shareholders as popularly known. They are issued with share certificates and are entitled to dividends.
If the productivity of workers producing a good increases, the supply curve will
A) not change.
B) become flatter.
C) shift to the right.
D) shift to the left.
E) become steeper.
Does the United States have a crime "problem" compared to other advanced and industrialized nations? Why or why not?
Why are the definitions of crime and criminal behavior critically important to political entities? Explain.
Assessing whether the United States has a crime "problem" compared to other advanced and industrialized nations is a complex matter that requires careful analysis and consideration of various factors. It is essential to recognize that crime rates and their comparison can be influenced by numerous socio-economic, cultural, and demographic factors.
Here are some points to consider:
Crime Rates: When evaluating crime levels, it is crucial to examine various crime indicators, such as violent crime rates, property crime rates, or specific types of offenses. Comparative analysis should consider the specific types of crimes and the frequency at which they occur.
Data and Reporting: Comparing crime rates across nations can be challenging due to differences in reporting practices, data collection methodologies, and legal definitions. Variations in crime reporting and recording practices can affect the accuracy and comparability of crime statistics.
Socio-economic Factors: Crime rates are influenced by socio-economic factors such as poverty, income inequality, unemployment rates, educational attainment, and social welfare systems. These factors can vary among countries and have an impact on crime levels.
Cultural and Demographic Differences: Cultural and demographic factors, including population density, diversity, social norms, and attitudes towards crime, can also affect crime rates. These factors can differ significantly among nations, leading to variations in crime levels.
Regarding the definitions of crime and criminal behavior, they are critically important to political entities for several reasons:
Legal Framework: Definitions of crime form the foundation of a country's legal system. They define what actions are considered unlawful and provide guidelines for law enforcement, the judiciary, and the criminal justice system to identify, prosecute, and punish offenders.
Consistency and Fairness: Clear and precise definitions of crime ensure consistency and fairness in the application of laws. It helps prevent arbitrary or discriminatory enforcement and ensures equal treatment under the law.
Public Safety and Order: Defining criminal behavior helps protect public safety and maintain social order. By identifying and categorizing certain behaviors as crimes, governments can establish rules and regulations that help deter individuals from engaging in harmful actions and protect citizens from harm.
Resource Allocation: Accurate definitions of crime assist in resource allocation for law enforcement, judicial processes, and correctional systems. It enables governments to focus their efforts and resources on combating specific types of criminal behavior based on their severity and impact on society.
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Which of these examples demonstrate common qualifications for Information Support and Services careers? Check
all that apply.
Gabriella is a good leader and handles responsibility well.
Blaine can stand for long periods of time without getting tired.
Maureen is able to lift heavy objects.
Kyung can accurately estimate how long different tasks will take.
Carter is skilled in art and graphic design.
Octavio is good at breaking down large projects into smaller steps.
Answer:
146
Explanation:
Answer: 1. Gabriella is a good leader and handles responsibility well.
4. Kyung can accurately estimate how long different tasks will take.
6. Octavio is good at breaking down large projects into smaller steps.
Match the requirements for application to the type of school.
1. requires high school transcripts or GED application
graduate school
2. requires high school transcripts as well as the SAT or ACT, which demonstrate the ability to succeed
career or technical program
3. requires college transcripts that demonstrate a bachelor’s degree was earned; may require the GRE or another specific exam that demonstrates the ability to succeed in a specific program
Things to match to: graduate school, career or technical program, and university
Answer:
1. graduate school
2. career or technical program
3. university
Explanation:
I'm assuming after thoroughly reading your long descriptions.
Google is known for unusual interview questions. Explain what advantages might these have over more traditional questions about education and experience?
It is Eliza’s first year at a company. The dress code says that women need to wear closed-toed shoes. However, it is summer and Eliza has noticed that many women, even some who are supervisors, are coming in wearing sandals. She would like to wear sandals too. What should she do?
Jonas and Jameela work at the same company but in completely different departments. Their company has a policy that employees can date as long as neither in the relationship is in a supervisor position over the other. Jameela has been asked to manage a project and just found out that Jonas will be on the team that she is managing. What is the ethical thing to do in this circumstance?
Imagine that you were tasked with writing the promotions section of an employee handbook. What factors would you use to determine eligibility? How would you make sure that the process was fair?
Imagine that you have been assigned to work with a group of people that you have not met. The leader asks that everyone share their strengths and weaknesses with the group so that she can consider how to delegate tasks. What would you say about yourself and why? How might these strength and weaknesses shape your role in the group?
Answer:
1. those advantages could be very dangerous. someone could've hacked the system or anything & they're trying to get your information.
2. eliza should check in with her manager/boss and ask if it's ok for her to wear sandals.. just to be on the safe side.
3. jameela and jonas need to set some standards in their "relationship" because what they have going on can cause both of their jobs.
4. i would make sure that the promotions are fair, and not giving people promotions because i know them or anything, i'm gonna make sure that they've worked hard for it.
5. by telling these people my strengths & my weakness would cause less problems. there could be some things that i like and they don't like and we can make sure to never reach that point, because it's gonna cause a lot of trouble. explaining yourself or telling more about yourself could really help others get you.. that way you don't have to be rude to people when they say something you don't like or do something you don't like.
Explanation:
i hope this helped you!
List 7 types of media's with notes about them. Or less.
Answer:
good
Explanation:
Print Media (Newspapers, Magazines)
Broadcast Media (TV, Radio)
Outdoor or Out of Home (OOH) Media.
Internet.
In addition to competition for food, what is another example of a density dependent process that can affect population growth rates?
Predation, inter- and intraspecific competition, waste buildup, and diseases including parasitic diseases are the most density-dependent biological (biotic) factors. Generally speaking, a population's mortality rate increases with population density.
What is Density-dependent regulation?When population growth rates are controlled by population density, this is known as density-dependent processes in population ecology.
Predation, intra- and interspecific competition, waste accumulation, and diseases including parasitic diseases are the most density-dependent biological (biotic) factors.
Normal mortality rates increase with population density.
The reproduction rates of the individuals, for instance, will often be lower during intra- and interspecific competition, slowing the rate of population expansion.
Because the predator has a harder time discovering its food supply, low prey density also raises the mortality of the prey.
Results from a study on the giant intestinal roundworm (Ascaris lumbricoides), a parasite of humans and other mammals, provide as an illustration of density-dependent control.
The information indicates that the parasite is less fertile in denser populations since there were fewer eggs present.
The fact that females would be smaller in groups with increased density due to scarce resources and hence lay fewer eggs is one explanation for this phenomena.
In a 2009 study, the concept that female weight had any bearing on the outcome was evaluated and refuted.
There is still more research that needs to be done to determine the exact reason why this organism's fecundity is density-dependent.
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Suppose a u. S. Treasury bond will pay $4,475 five years from now. If the going interest rate on 5-year treasury bonds is 4. 25%, how much is the bond worth today?.
Suppose a u. S. Treasury bond will pay $4,475 five years from now. If the going interest rate on 5-year treasury bonds is 4. 25%, the bond worth today is $2030.31.
What is treasury bond?Treasury bonds (T-bonds) are government debt securities with maturities longer than 20 years that are issued by the U.S. Federal government. T-bonds accrue interest at regular intervals until maturity, when they are paid in full to the owner.
Treasury bonds are a subset of the broader class of U.S. government debt known as treasuries, which are sometimes thought of as nearly risk-free because they are supported by the government's power to tax its citizens.
One of the four categories of debt that the U.S. Department of the Treasury issues to fund government spending is known as a Treasury Bond (or "T-Bond"). Treasury bills, Treasury notes, Treasury bonds, and Treasury Inflation-Protected Securities are the four categories of debt (TIPS). The maturities and coupon rates of these securities vary.
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At this time, the bond is valued $3,634.23.
A sum of money's present value is how much it is worth today.
What distinguishes present value from future value?The present value is the sum of money that must be invested in order to achieve a specific future goal.
Future value is the sum of money that, if the original investment is made, will increase over time.
To realize future value, you must invest the present value.
Given,
$4,475 Future Value
t = 5 years
Rate = 4.25%
Present Value Calculation =
The files listed below with an attachment include the formulas and calculations.
The present value is one of the essential concepts in valuation.
Simply said, figuring out the value of an amount that will be received in the future today is how to determine its present value.
Selecting the most profitable investments is made simpler by evaluating a variety of investment possibilities.
The bond's current value is therefore $3,634.23
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Fantastic Footwear can invest in one of two different automated clicker cutters, A and B. The first cutter, A, has a $ 100 000 first cost. Another similar cutter with many extra features, B, has a $ 400 000 first cost. Cutter A will save $ 50 000 per year over the cutter now in use. Cutter B will save $ 150 000 per year. Each clicker cutter will last five years. If the MARR is 10 percent, which alternative is better? Use an IRR comparison.
Based on the IRR comparison, Cutter A is the better alternative for Fantastic Footwear.
To determine which alternative is better, we can compare their internal rates of return (IRR) based on the given information.
For Cutter A:
Initial cost = $100,000
Annual savings = $50,000
For Cutter B:
Initial cost = $400,000
Annual savings = $150,000
To calculate the IRR, we need to find the discount rate at which the present value of savings equals the initial cost. Using the MARR of 10 percent, we can calculate the IRR for each option.
For Cutter A:
IRR_A = MARR - (Initial cost / Annual savings) = 10% - ($100,000 / $50,000) = 10% - 2 = 8%
For Cutter B:
IRR_B = MARR - (Initial cost / Annual savings) = 10% - ($400,000 / $150,000) = 10% - 2.67 = 7.33%
Comparing the IRRs, we find that Cutter A has a higher IRR of 8% compared to Cutter B's IRR of 7.33%. Therefore, based on the IRR comparison, Cutter A is the better alternative for Fantastic Footwear.
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when a company decides to publicize information collected in a social audit, this is called:
When a company decides to publicize information collected in a social audit, this is called social reporting.
Social reporting is the process of disclosing information about a company's social and environmental performance to its stakeholders, including shareholders, employees, customers, suppliers, and the public. Social reporting can take various forms, such as annual sustainability reports, integrated reports, or standalone social reports. The purpose of social reporting is to increase transparency and accountability, demonstrate a company's commitment to social and environmental issues, and enhance its reputation. Social reporting can also help companies identify areas for improvement and set goals for future performance. It is important for company to conduct social audit and engage in social reporting to build trust with their stakeholders and contribute to a more sustainable and responsible business environment.
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9. Your platoon received a proficiency rating of advanced task proficiency free of significant shortcomings with a GO in 82% in both performance measures and leader performance measures, and a 100% of all critical performance measures. What rating did your platoon earn?
The platoon earned a proficiency rating of "Advanced" or "A" based on their performance measures, leader performance measures, and the achievement of 100% on critical performance measures.
Based on the information provided, your platoon earned a proficiency rating of "Advanced" or "A".
To arrive at this conclusion, let's break down the information step by step:
1. The statement mentions that your platoon received a proficiency rating of "advanced task proficiency free of significant shortcomings." This indicates that your platoon demonstrated a high level of competence in performing their tasks without any major deficiencies.
2. The statement also mentions that your platoon received a "GO" (which stands for "Good") in both performance measures and leader performance measures. This means that your platoon performed well in these areas.
3. Furthermore, the statement states that your platoon achieved 100% on all critical performance measures. This suggests that your platoon excelled in meeting the important performance standards.
Based on these factors, it can be concluded that your platoon earned a proficiency rating of "Advanced" or "A". This rating reflects the platoon's exceptional performance, indicating that they exceeded expectations and achieved a high level of proficiency.
In conclusion, your platoon earned a proficiency rating of "Advanced" or "A" based on their performance measures, leader performance measures, and the achievement of 100% on critical performance measures.
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what is decomposition?Name two types of decomposers and describe their importance.....
Answer:
A decomposer is an organism that decomposes, or breaks down, organic material such as the remains of dead organisms. Decomposers include bacteria and fungi. Mushrooms, such as those in the image above, are a type of fungus and play a role in decomposition.
A high accounts receivable turnover ratio indicates.
A high accounts receivable turnover ratio indicates that a firm is efficient in converting receivables to cash.
What is the receivables turnover ratio?
Receivables turnover ratio is an example of an activity ratio which measures how efficiently a firm carries out its daily activities. Receivables turnover ratio is the ratio of revenue to average reciveables.
Receivables turnover ratio = Revenue / average receivables
The faster it is for a firm to collect its receivables, the more efficient the firm is.
uh oh, this account has been identified as a shared account. it has been suspended due to violating our terms of use.
It appears that the account in question has been flagged as a shared account, which means that multiple users have been accessing and using the account in violation of the platform's terms of use. As a result, the account has been suspended by the platform in order to prevent further misuse and to protect the integrity of the platform.
Shared accounts are generally prohibited by most platforms, as they pose a security risk and can result in unauthorized access to sensitive information or actions. Sharing login credentials or allowing multiple users to access an account can also lead to confusion and inconsistencies in the content and activity on the account, which can harm the platform's reputation and user experience.
If you were one of the users who had been accessing the account, you should contact the platform's support team to address the issue and potentially appeal the suspension. However, it is important to recognize that sharing accounts is not a recommended practice and can lead to serious consequences. It is always best to use individual accounts for each user and to keep login information secure and private.
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Five years ago, a customer purchased 1,000 shares of ABC stock at $60 per share. The stock has appreciated in value and is currently worth $100,000. The company announces that it is spinning off a subsidiary, DEF, to its shareholders. The value of the new company being spun off equals 10% of the old company. The customer will have:
Answer:
$54,000 cost basis in ABC; $6,000 cost basis in DEF
Explanation:
The original cost basis is the price that was paid for the shares. This means that 1,000 shares at $60 each gives a cost basis of $60,000.
Now if the subsidiary DEF is worth 10% of ABC which has a cost basis of $60,000, then the share of DEF that customers will have will be 10% of $60,000.
(10÷100) x $60,000 = 0.1 x $60,000
= $6,000.
Now, if DEF is worth $6,000 (i.e 10%) of ABC, then ABC's worth will now be $60,000 - $6,000 = $54,000.
The original cost basis is that price that was paid for the shared initially. This means that it has no effect on the increase in value of the shares.
Cheers.
which viability factor involves building relationships with a experienced professionals
Relationship factor helps in building relationships with a experienced professionals.
Give a brief account on Business viability.Viability means that the business is (or may be) successful. A viable business is profitable, meaning it generates more revenue than you spend running it. If a company is not profitable, it is difficult to recover. Companies need to increase sales, reduce costs, or both. Profitability is closely related to solvency and liquidity as well as profit.
There are two processes to creating a profitable business. First, it means formulating a marketing strategy by knowing who you are, who you sell to, and who else you sell to. Second, it means your financial home is in order.
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What accounting book should a merchandising business use to show a payment and transaction history for each customer who bought items
with credit?
When a company has customers who buy units of merchandise on credit, its accountant will post entries in the ____
Answer:
Accounts receivable subsidiary ledger.
Explanation:
Answer: accounts receivable subsidiary ledger
Explanation:Specialized journals are useful when posting entries for frequent business transactions. For example, a cash receipt journal captures cash transactions. This is different from an accounts receivable subsidiary ledger, which shows a payment and transaction history for each customer who bought items with credit
What are two responsibilities of a Lean-Agile Center of Excellence? (Choose two. )
To help establish relentless improvement
To coordinate Portfolio Level events
To lead Inspect and Adapts events
To implement a new organizational structure
To foster SAFe Communities of Practice
Two of a Lean-Agile Center of Excellence's duties are: To promote continuous progress, SAFe Communities of Practice should be promoted.
A focused group inside an organisation known as a Lean-Agile Center of Excellence is in charge of promoting and assisting in the adoption of Lean-Agile concepts, methods, and principles. A Lean-Agile Center of Excellence's main objective is to make sure that the firm can continuously enhance its business processes and produce better results. This entails assisting teams with coaching and direction, enabling the adoption of fresh approaches, and promoting an innovative and lifelong learning culture. A Lean-Agile Center of Excellence is also in charge of overseeing Inspect and Adapts events, supporting SAFe Communities of Practice, and organising Portfolio Level events. Organizations can increase their capacity to adjust to shifting market conditions, deliver value to consumers more successfully, and accomplish these goals by building a Lean-Agile Center of Excellence.
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it is reasonable to assume that charitable organizations have a goal to maximize profits.
it is unreasonable to assume that charitable organizations are established to maximize profits.
A charitable organization refers to those bodies established for social philanthropy and well-being.
An example of charitable organization is the various foundations around us which are established to ensure well-being of the society.
Majority of the charitable organization are established to cater for social needs not for maximization of profit.
Therefore, it is unreasonable to assume that charitable organizations are established to maximize profits.
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The number of private investigators is expected to increase from 52,000 in 2006 to 61,000 in 2016. If there are 648,982 police officers in 2006, how many police officers must there be in 2016 to have a greater percent increase than that of private investigators? a. 657,983 b. 761,307 c. 671,128 d. 713,180 Please select the best answer from the choices provided A B C D.
The number of police officers in 2016 to have a greater percent increase than that of private investigators will be 761,307.
How to calculate percentage increase?Given:
Private investigators in 2006 = 52,000
Private investigators in 2016 = 61,000
The percentage increase in the number of private investigators can be calculated as:
\(\begin{aligned} \rm Percentage\:increase\ &= \dfrac{Increase\:in\:Private \:investigators\:from\:2006\:2016}{Private\: investigators\:in\:2006}\times 100\\\\&= \dfrac{61,000 - 52,000}{52,000}\times 100\\\\&=\dfrac{9,000}{52,000}\times 100\\\\&= 17.30\% \end\)
The increased number of police officers can be calculated as;
\(\begin{aligned} \rm Police\:officers\:in\:2016 &= Police\:officers\:in\:2006 + 17.30\%\\\\&= 648,982 + 17.30\%\\\\&= 761255.886\end\)
Since the percentage increase in the number of officers is more than that of private investigators. The number of police officers will be 761,307.
Hence the correct option is b.
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James bought an option contract on Optus shares with an exercise price of $60 and an expiry date of three months. The market price for Optus shares today is $56.85. The call price is trading at $0.45.
Calculate the break-even amount for the call position and draw a fully labelled diagram for both buyer of the option and seller of the option.
At what minimum share price will the option buyer exercise the option on the expiration date?
the minimum share price at which the option buyer can exercise the option on the expiration date is $60. For this option to be profitable at expiration, the stock price must rise above $60.45 by at least the premium of $0.45.
A break-even point is the point at which the gains equal the losses. To calculate the break-even amount for the call position, the premium is added to the exercise price.
Break-even point for the buyer of the call option will be calculated as follows:
Break-even point = Exercise price + Premium = $60 + $0.45 = $60.45
The minimum share price at which the option buyer can exercise the option on the expiration date will be the exercise price.
Hence, the minimum share price at which the option buyer can exercise the option on the expiration date is $60.
For the seller of the call option, a maximum profit of $0.45 is made if the stock price stays below $60.45 until expiration. In this case, the seller retains the premium of $0.45.
This is illustrated in the following diagram: For the call option buyer, the following diagram shows that the buyer of the call option profits from the call option when the share price exceeds the break-even point. For this option to be profitable at expiration, the stock price must rise above $60.45 by at least the premium of $0.45.
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