What Happens to an Option If the Underlying Stock Has

question 65

Multiple Choice

What happens to an option if the underlying stock has a 2-for-1 split?

• A)There is no change in either the exercise price or in the number of options held.
• B)The exercise price will adjust through normal market movements; the number of options will remain the same.
• C)The exercise price would become half of what it was and the number of options held would double.
• D)The exercise price would double and the number of options held would double.
• E)There is no standard rule - each corporation has its own policy.

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