In Situations Where an Option-Pricing Model Is Required to Be

question 14

Multiple Choice

In situations where an option-pricing model is required to be used to determine the fair value of equity instruments granted AASB 2 Share-based Payment:

• A) requires expected dividends to be taken into account when measuring the shares or options granted.
• B) allows the entity to choose the option-pricing model it wishes to use, but contains a number of factors that the option-pricing model selected must take into account as a minimum.
• C) requires the use of a binominal option-pricing model.
• D) requires the use of the Black-Scholes-Merton formula.

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Definitions:

Sweat Glands

Specialized exocrine glands found in the skin that produce sweat, a fluid involved in thermoregulation and excretion.

Mucous Membranes

Lining of various cavities in the body, such as the nose, mouth, and lungs, that secrete mucus.

Jaundice

A medical condition characterized by yellowing of the skin and eyes due to high levels of bilirubin in the blood, often indicating liver or bile duct problems.

Bile

A digestive fluid produced by the liver and stored in the gallbladder, aiding in the digestion and absorption of fats.