When the Exercise Price of an Option Is Equal to the Current

question 65

Multiple Choice

When the exercise price of an option is equal to the current share price, the option is said to be

• A)at-the-money.
• B)in-the-money.
• C)out-of-the-money.
• D)None of the above.

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Definitions:

Accounts Receivable

Sums due to a company from its clients for products or services that have been supplied or utilized but remain unpaid.

Net Income

The residual income of a company after total revenue has been diminished by all costs and taxes.

Cash Flows

The net amount of cash being transferred into and out of a business, especially considered important for assessing liquidity, flexibility, and overall financial health.

Indirect Method

An approach to preparing the cash flow statement where net income is adjusted for changes in balance sheet accounts to calculate cash from operating activities.