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.What was the cost borne by the other shareholders when the options were issued?

Question

Quizplus · Accepted Answer

The cost borne by the other shareholders is the difference between the market price at the time of exercise and the exercise price multiplied by the number of options exercised. Therefore, the cost borne by the other shareholders is (25-22) x 1,000 = $3,000.