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Call Option

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Consider a five-year call option on a non-dividend-paying stock granted to employees. The option can be exercised at any time after the end of the first year. Unlike a regular exchange-traded call option, the employee stock option cannot be sold.

What is the likely impact of this restriction on early exercise?

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Solution Summary

The solution provides a brief answer determining a five-year call option on a non-dividend paying stock with some explanation. The explanation is simple and easy to understand.

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The restriction will not have any impact on early exercise. This is because for a non-dividend paying call option it is always beneficial to ...

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