easy · Investment Banking implied-share-price

A firm has $10.0 million options outstanding with a strike price of $50.00. The current market price is $45.00.

What is the impact of these options on the Fully Diluted Shares Outstanding?

  1. No shares are added because the options are out-of-the-money.
  2. Add 1.0 million shares as a conservative placeholder.
  3. Subtract 1.0 million shares due to the negative dilution formula.
  4. Add 10.0 million shares to the count.

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