NACVA Exam CVA Topic 6 Question 92 Discussion

Actual exam question for NACVA's CVA exam

Question #: 92
Topic #: 6

[All CVA Questions]

In creating employee stock options, the issuing company usually endeavors to set the option's strike price at the fair market value of the underlying shares. When the strike price is set at the fair market value, the intrinsic value is ________, and the only value of the option is its __________.

AOne Value, market value

BZero value, time value

CCurrent market value, zero value

DPar value, zero value

Show Suggested Answer

Suggested Answer: A, B, C

by Felix at Jul 17, 2024, 02:31 AM

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Kathrine

5 days ago

But setting the strike price at fair market value means the intrinsic value is zero, so it must be B.

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Carisa

7 days ago

I think the answer is B. When the strike price is set at the fair market value, the intrinsic value is zero, and the only value of the option is its time value. Time value is the value of the option due to the possibility of the price increasing before the option expires.

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Alpha

9 days ago

I disagree, I believe the answer is B) Zero value, time value.

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Kathrine

13 days ago

I think the answer is A) One Value, market value.

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