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Arnold exercised an incentive stock option in 2014, acquiring 1,500 shares of stock at an option price

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Arnold exercised an incentive stock option in 2014, acquiring 1,500 shares of stock at an option price of $80 per share. The FMV of the stock at the date of exercise was $110 per share. In 2016, the rights become freely transferable and are not subject to a substantial risk of forfeiture. Arnold sells the shares in 2017 for $165 per share. How do these transactions affect AMTI in 2014, 2016 and 2017?

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2014 FMV 1500 shares 110 165000 Option Price 1500 80 120000 Po...View the full answer


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Stocks (also known as equities) are securities that represent ownership in a company. They are issued by companies to raise capital, and when an individual buys stocks, they become a shareholder in that company. Investing in stocks can be a way for individuals to potentially earn a return on their investment through dividends and capital appreciation. However, investing in stocks also carries a level of risk, as the value of the stock can fluctuate based on various factors such as the financial performance of the company and general market conditions. For companies, issuing stocks can be a way to raise funds for growth and expansion. When a company goes public by issuing an initial public offering (IPO), it can raise significant capital by selling ownership stakes to the public. Companies can also issue additional stock offerings to raise additional capital as needed.

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