Aharon Exercises 10 Stock Options Awarded Several Years Ago

question 84

Multiple Choice

Aharon exercises 10 stock options awarded several years ago. The following information pertains to the options: (1) each option gives the employee the right to buy 10 shares, (2) the market price on the grant date was $7, (3) the strike price is $10, and (4) the market price on the exercise date was $15. How much will it cost Aharon to purchase the options on the exercise date?

• A)$90
• B)$500
• C)$700
• D)$1,000

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Definitions:

Transform Boundary

A type of tectonic plate boundary where two plates slide past each other horizontally.

Seafloor Spreading

The process by which new oceanic crust is formed at mid-ocean ridges and slowly moves away from the ridge, contributing to continental drift.

Continental Drift

The theory that Earth's continents have moved over geologic time relative to each other, thus appearing to drift across the ocean bed.

Mid-Atlantic Ridge

A continuous underwater mountain range in the Atlantic Ocean, formed by tectonic plate divergence.