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Quiz 3 - Understanding Your Equity's Value - Strike Price vs. FMV (and 409A) (Email 3)

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Question 1 of 4

What is the primary purpose of an independent 409A valuation for a private company? 

A

To set the Fair Market Value (FMV) of the company's common stock.

B

To calculate the total number of employee options.

C

To determine the company's annual profit.

D

To guarantee the company's future IPO price.

Question 2 of 4

The 'spread' of a stock option is calculated by taking the...

A

strike price and dividing it by the FMV.

B

total options and subtracting the vested options.

C

grant date and subtracting the vesting cliff.

D

FMV and subtracting your strike price.

Question 3 of 4

What does it mean for your stock options to be 'in the money'?

A

The Fair Market Value (FMV) is higher than your strike price.

B

The company has over a million shares outstanding.

C

The company has a public offering (IPO).

D

Your vesting cliff has been met.

Question 4 of 4

Simple Homework: If your company shares its 409A updates with employees, try to find the latest FMV. Then, use that number and your personal strike price to calculate the "spread" for one of your options.

Were you able to calculate the "spread" on your stock options?

A

Yes

B

No

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