Fully Vested Incentive Stock Options for 100,000 Shares of Common

question 10

Essay

Fully vested incentive stock options for 100,000 shares of common stock at an exercise price of $50 were outstanding for the entire year. The market price of the stock during the year averaged $56.
Required:
By how many shares will the assumed exercise of these options increase the weighted-average number of shares outstanding when calculating diluted earnings per share?

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Definitions:

Analyze Assumptions

The process of critically examining the underlying beliefs and biases that inform one's thoughts or arguments.

Productive

Relating to the ability to produce or generate a significant amount or result, often used in the context of work, creativity, or economics.

Commit Crimes

The act of engaging in activities that violate the law.

Critical-Thinking Guidelines

Principles or strategies designed to promote reasoned analysis, evaluation, and synthesis of information to guide beliefs or actions.