CFA Practice Question

There are 334 practice questions for this study session.

CFA Practice Question

Which of the statement(s) is (are) true?

I. Under the intrinsic-value-based method prescribed by APB 25, options generally do not result in a charge to earnings.
II. Companies electing the intrinsic-value-based method prescribed by APB 25 are required by SFAS 123 to report in the notes to their financial statements pro-forma net earnings and earnings per share calculations assuming the options had been expensed.
III. Options with zero intrinsic value at issue have zero fair value and should not give rise to expense recognition.
Correct Answer: I and II

III: if market price = exercise price (zero intrinsic value), options may still have value.

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