How Is the Bargain Element for a Stock Option Calculated

question 7

Multiple Choice

How is the bargain element for a stock option calculated?

• A) The difference between the strike price and the market price on the date of grant.
• B) The difference between the market price on the exercise date and the market price on the date of grant.
• C) The difference between the market price on the exercise date and the strike price.
• D) The difference between the market price on the sale date and the strike price.

---

Definitions:

Controlled

Describes an experimental condition or variable that is carefully managed or regulated to isolate its effects.

Information Processing

A psychological model that describes how humans perceive, analyze, manipulate, and store information, akin to the functions of a computer.

Attention

Information processing involving the ability to strategically choose among and sort out different stimuli in the environment.

Selective Encoding

The process of focusing attention on relevant information while ignoring irrelevant information during problem solving and decision making.