Assume that a company wishes to grant stock options to a supplier in exchange for services rendered.The company chose to value this exchange at the going market rate charged by the suppliers' competitors.This is an example of a Level 2 Fair Value Hierarchy application.

Question

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This scenario is an example of a Level 3 Fair Value Hierarchy application because it involves using unobservable inputs (e.g., the market rate charged by competitors) for the valuation, as there is no observable market price for the specific transaction.

Assume That a Company Wishes to Grant Stock Options to a Supplier