1. An option is "in the money" if:
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It is vested and, therefore, exercisable.
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Its price is less than the stock's market value.
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Its price is greater than the stock's market value.
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2. With nonqualified stock options, taxes are triggered:
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When the options are granted
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When the options are exercised
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When the stock is sold
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Both b and c
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3. Employee stock options:
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Allow you to buy a certain number of shares of your employer's stock at a pre-set price within a certain time frame.
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Require you to buy a certain number of shares of your employer's stock at a pre-set price within a certain time frame.
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Prohibit you from buying any stock in your employer except at certain times.
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4. Employee stock options are given to:
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Executives only.
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Rank and filers only.
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Executives and rank and filers alike.
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5. With incentive stock options, taxes are triggered
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When the options are granted
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When the options are exercised
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When the stock is sold
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It depends
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6. Which stock options may be granted at discounts to their then market prices?
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Nonqualified stock options
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Incentive stock options
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Both
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7. Your employer's stock is selling for $50 a share. You use a "stock swap" to exercise your option to buy 5,000 shares at $25 each. What happens?
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You pay $125,000 in cash to exercise your option
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You exchange 2,500 shares you already own for the 5,000 new shares
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You borrow from a stockbroker the money needed to exercise your option and, simultaneously, sell at least enough shares to cover your costs
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8. It is prudent to exercise your options early when:
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You have a lot of faith in your employer's prospects and, therefore, its stock
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You are overdosing on company stock
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