Purchase Solution

# Stock Price After Options are Exercised

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Yert Corporation issues 100 stock options to its CEO on January 1, 2005. The stock options have an exercise price of \$50 and the current stock price is \$50 at the grant date. There are 200 shares outstanding as of January 1, 2005. Two years later, the CEO exercises his options.

A) At this time the stock price is \$65 and there are 200 shares outstanding (before exercise of stock options). What will the stock price roughly be after the options are exercised?

B) At this time the stock price is still \$50 and there are still 200 shares outstanding (before exercise of stock options). What will the stock price be after the options are exercised?

##### Solution Summary

This posting calculates the stock price after the stock options are exercised at two different market prices of stock. Work is shown in an Excel attachment.

##### Solution Preview

See the attached Excel file.

Yert Corporation issues 100 stock options to its CEO on January 1, 2005.  The stock options have an exercise price of \$50 and the current stock price is \$50 at the grant date.  There are 200 shares outstanding as of January 1, 2005.  Two years later, the CEO exercises his options.

A)  At this time the stock price is \$65 and there are 200 shares outstanding (before exercise of stock options).  What will the stock price roughly be after the options are ...

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