Aharon Exercises 10 Stock Options Awarded Several Years Ago

question 84

Multiple Choice

Aharon exercises 10 stock options awarded several years ago. The following information pertains to the options: (1) each option gives the employee the right to buy 10 shares, (2) the market price on the grant date was $7, (3) the strike price is $10, and (4) the market price on the exercise date was $15. How much will it cost Aharon to purchase the options on the exercise date?

• A)$90
• B)$500
• C)$700
• D)$1,000

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Definitions:

Innocent Misrepresentations

False statements made without fault regarding a material fact that induce someone into a contract.

Punitive Damages

are monetary compensations awarded in a lawsuit as a punishment to the defendant and to deter future similar acts.

Fraud

A deliberate deception to secure unfair or unlawful gain, or to deprive a victim of a legal right.

Misrepresentation

The act of giving false or misleading information about a matter of fact, which may induce someone to enter into a contract or make a decision they otherwise might not have made.