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Basic Question 1 of 14

According to FAS 123 (R), companies are required to value stock options using an option-pricing model. The preferred model is the:

A. Black-Scholes-Merton model.
B. Monte Carlo simulation model.
C. Binomial model.
D. There is no preferred option-pricing model.

User Contributed Comments 3

User Comment
thebkr777 Contradictory to reading "Fair value was to be estimated using Black-Scholes or binomial option-pricing models."
b25331 Some clarification here, the curriculum states only, that the two models are commonly used, but accounting standards do not prescribe a particular model
davidt876 thanks
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Your review questions and global ranking system were so helpful.
Lina

Lina

Learning Outcome Statements

explain issues associated with accounting for share-based compensation;

explain how accounting for stock grants and stock options affects financial statements, and the importance of companies' assumptions in valuing these grants and options.

CFA® 2024 Level II Curriculum, Volume 2, Module 12.