Jessica has been recruited from intel to Nvidia. To get her Nvidia, the company has to offer significant stock options. The options are presented below: yr 1 1000 yr 2 1500 yr 3 500 yr 4 500 yr 5 8000 yr 6 9000 the current and strike price of the stock are $768. Jessica believes that the stock will increase 10% a year through year 4. She then believes that the stock will double and remain at that price for the next year. based on Jessica's belief, when is the best time for her to exercise her options and what are they worth? how much money does jessica have if she exercise her options in year 3? why does Nvidia put the largest amount of options in years 5 and 6?
Jessica has been recruited from intel to Nvidia. To get her Nvidia, the company has to offer significant stock options. The options are presented below: yr 1 1000 yr 2 1500 yr 3 500 yr 4 500 yr 5 8000 yr 6 9000 the current and strike price of the stock are $768. Jessica believes that the stock will increase 10% a year through year 4. She then believes that the stock will double and remain at that price for the next year. based on Jessica's belief, when is the best time for her to exercise her options and what are they worth? how much money does jessica have if she exercise her options in year 3? why does Nvidia put the largest amount of options in years 5 and 6?
Practical Management Science
6th Edition
ISBN:9781337406659
Author:WINSTON, Wayne L.
Publisher:WINSTON, Wayne L.
Chapter4: Linear Programming Models
Section: Chapter Questions
Problem 83P
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Jessica has been recruited from intel to Nvidia. To get her Nvidia, the company has to offer significant stock options. The options are presented below:
yr 1 1000
yr 2 1500
yr 3 500
yr 4 500
yr 5 8000
yr 6 9000
the current and strike price of the stock are $768. Jessica believes that the stock will increase 10% a year through year 4. She then believes that the stock will double and remain at that price for the next year.
based on Jessica's belief, when is the best time for her to exercise her options and what are they worth?
how much money does jessica have if she exercise her options in year 3?
why does Nvidia put the largest amount of options in years 5 and 6?
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