On June 6, Aretha Dafoe exercised her option to purchase 20,000 shares of Shalom Company $1 par
Question:
On June 6, Aretha Dafoe exercised her option to purchase 20,000 shares of Shalom Company $1 par value common stock at an option price of $8. The market price per share was $8 on the grant date and $36 on the exercise date.
(1) What must the fair value of the option be estimated?
(2) Is the market price of the stock on the exercise date most relevant to Dafoe or to Shalom Company?
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Par Value
Par value is the face value of a bond. Par value is important for a bond or fixed-income instrument because it determines its maturity value as well as the dollar value of coupon payments. The market price of a bond may be above or below par,...
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