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

question 21

Multiple Choice

In situations where an option-pricing model is required to be used to determine the fair value of equity instruments granted IFRS 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:

Fixtures

In real estate, fixtures are items of personal property that are attached or fixed to the land or building in such a way that they become part of the real property.

Perfected

A legal term indicating that an interest or lien on a property has been legally completed and registered, making it enforceable against third parties.

Goods

Tangible personal property, which includes physical items that can be seen, touched, and possessed.

Conflicting Interests

Situations where competing priorities or obligations cause a conflict for an individual or organization, potentially leading to ethical dilemmas.