The exercise price and number of shares of an option are unaffected by
A) a reverse stock split.
B) payment of a cash dividend.
C) a 5 for 1 split.
D) a stock dividend.

Question

Quizplus · Accepted Answer

Payment of a cash dividend does not affect the exercise price or the number of shares of an option. Stock splits and stock dividends alter the number of shares and potentially the exercise price to maintain the option's value, but cash dividends do not directly change these option contract terms.

The Exercise Price and Number of Shares of an Option