Suzanne Received 20 ISOs (Each Option Gives Her the Right

question 22

Essay

Suzanne received 20 ISOs (each option gives her the right to purchase 20 shares of stock for $12 per share)at the time she started working,when the stock price was $14 per share.Three years later,when the share price was $23 per share,she exercised all of her options.How much cash will Suzanne need on the exercise date of the stock options?

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Definitions:

Maximum Possible Loss

The worst-case scenario loss that an investor or business could experience in their investment or operation.

Initial Margin

Initial Margin is the minimum amount of capital required to enter a position for trading in the securities market.

Borrowed

The act of receiving something with the promise to return it or its equivalent, often referring to funds obtained with the agreement to pay back with interest.

Common Stock

A type of security that represents ownership in a corporation, giving holders voting rights and a share in the company's profits via dividends.