What Happens to an Option If the Underlying Stock Has

question 19

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.
• E) There is no standard rule-each corporation has its own policy.

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Definitions:

Linear Flow

A sequential process or progression where each step follows the previous one in a straight line.

Engagement

The degree of attention, interest, or involvement that an individual or audience shows towards a particular activity or entity.

Classroom Seating

The arrangement of seats or desks in a classroom, which can affect student engagement and learning.

Collaborative Activities

Tasks or projects that involve two or more people working together towards a common goal.