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Corporations Often Sell, or Exchange for Goods and Services, Various

Question 77

Multiple Choice

Corporations often sell, or exchange for goods and services, various call options on their shares.Which of the following is/are not true?


A) A call option gives the holder the right to acquire shares of common stock at a fixed or determinable price, called the strike price or exercise price.
B) If the market price of the shares increases above the exercise price, the holder of the option can benefit by exercising the option to purchase shares.
C) The excess of the market price over the exercise price is the option's intrinsic value.
D) Many firms pay part of the compensation of some employees by issuing call options on their own shares referring to these arrangements as employee stock options (ESOs) .
E) none of the above

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