In Situations Where an Option-Pricing Model Is Required to Be

question 23

Multiple Choice

In situations where an option-pricing model is required to be used to determine the fair value of equity instruments granted, the accounting standard, AASB 2 Share-based Payment:

• A) requires the use of a binominal option-pricing model.
• B) requires the use of the Black-Scholes-Merton formula.
• C) allows the entity to choose the option-pricing model it wishes to use, but contains a number of factors that the option-pricing model selected must take into account as a minimum.
• D) requires expected dividends to be taken into account when measuring the shares or options granted.

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