To Adjust for Stock Splits

question 21

Multiple Choice

To adjust for stock splits

• A) the exercise price of the option is reduced by the factor of the split, and the number of options held is increased by that factor.
• B) the exercise price of the option is increased by the factor of the split, and the number of options held is reduced by that factor.
• C) the exercise price of the option is reduced by the factor of the split, and the number of options held is reduced by that factor.
• D) the exercise price of the option is increased by the factor of the split, and the number of options held is increased by that factor.

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Definitions:

Double Taxation

The financial imposition where income taxes are paid twice on the same source of earned income, often in the context of corporate profits taxed both at the corporate level and again when distributed as dividends.

Independent Contractors

Workers who provide services to a business under terms specified in a contract, rather than as employees.

Licensing

A process where a company allows another to use its intellectual property or technology in exchange for a fee or royalty.

Royalties

A share of the income of a business paid by a franchisee to the franchisor.