What Happens to an Option If the Underlying Stock Has

question 35

Multiple Choice

What happens to an option if the underlying stock has a 2-for-1 split?

• A)There is no change in either the exercise price or in the number of options held.
• B)The exercise price will adjust through normal market movements; the number of options will remain the same.
• C)The exercise price would become one-half of what it was, and the number of options held would double.
• D)The exercise price would double, and the number of options held would double.

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Definitions:

Real Defense

A legitimate legal defense that can be used to void a contract or document, typically in cases of fraud or invalidity.

Principal Debtor

The primary individual or entity responsible for repaying a debt or fulfilling an obligation.

Personal Defense

Legal justifications used in civil and criminal cases that excuse or minimize the defendant's liability due to personal circumstances.

Attachment

A legal procedure by which a plaintiff can secure a defendant's property in the jurisdiction of the court to satisfy a judgment.