When a Stock Index Option Is Exercised, the Cash Payment

question 50

Multiple Choice

When a stock index option is exercised, the cash payment is equal to a specified dollar amount

• A) multiplied by the index level.
• B) multiplied by the exercise price.
• C) multiplied by the difference between the index level and the exercise price.
• D) multiplied by the sum of the index level and the exercise price.

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Definitions:

Semiannual Interest

Semiannual Interest refers to interest that is calculated and paid twice a year, commonly found in bonds and other types of loans.

Fiscal Year

A one-year period that companies and governments use for financial reporting and budgeting, which may not coincide with the calendar year.

Accrued Interest

The interest that has been incurred but not yet paid on a loan or bond.

Fiscal Year

A 12-month period used for accounting and financial reporting purposes, which may or may not align with the calendar year.