Lloydminster Ltd.issued 1,000 stock options to its president when their shares were trading in the market at $20.The exercise price was $22, and the market price when they were exercised was $25.How much money did the company receive from the transaction?

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Quizplus · Accepted Answer

The company did not receive any money from the transaction as the stock options were granted to the president. However, when the president exercised the options, they had to pay the exercise price of $22 per share to the company, which amounted to a total of $22,000 for the 1,000 options. Since the market price when they were exercised was $25, the president would have made a profit of $3 per share or $3,000 on 1,000 shares.