Which of the Following Describes the Correct Treatment of the Exercise

question 27

Multiple Choice

Which of the following describes the correct treatment of the exercise of nonqualified stock options (NQOs) ?

• A)Financial-no expense; tax-no deduction.
• B)Financial-no expense; tax-deduct bargain element at exercise.
• C)Financial-expense value over vesting period; tax-no deduction.
• D)Financial-expense value over vesting period; tax-deduct bargain element at exercise.

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Definitions:

General Merchandise

A category of goods that includes a wide range of products from apparel to home goods sold by retailers.

Discount Stores

are retail outlets that sell products at prices lower than those asked by traditional retail stores, often by selling in large volumes or foregoing some aspects of service.

Inflation

A broad escalation in prices coupled with a reduction in the purchasing power of currency.

Creditors

Individuals, businesses, or financial institutions that lend money or extend credit to others, expecting repayment in the future.