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 3-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-third of what it was, and the number of options held would triple.
• D) The exercise price would triple, and the number of options held would triple.
• E) There is no standard rule-each corporation has its own policy.

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Definitions:

Siblings

Individuals who share one or both parents in common, typically referred to as brothers or sisters.

Peers

Refers to individuals who are of similar age, status, or interest, often playing significant roles in socialization and influence during development.

Adolescence

The transitional stage from childhood to adulthood, typically characterized by physical, psychological, and social changes.

Rebellion

An act of resistance or defiance against established authority or conventional norms, often seen during adolescence.