How Is the Bargain Element for a Stock Option Calculated

question 120

Multiple Choice

How is the bargain element for a stock option calculated?

• A)The difference between the strike price and the market price on the date of grant
• B)The difference between the market price on the exercise date and the market price on the date of grant
• C)The difference between the market price on the exercise date and the strike price
• D)The difference between the market price on the sale date and the strike price

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Definitions:

Cash Outflow

Money leaving a business due to expenses, investments, or financing activities.

Cash Inflow

Money received by a company from its various activities, including sales, investments, financing, and operational activities.

Required Rate

Required rate refers to the minimum return an investor expects to achieve on an investment to consider it worthwhile.

Rate Of Return

The gain or loss of an investment over a specified period, expressed as a percentage of the investment's initial cost.