1 Exercise of Stock Options SE 4. On June 6, Aretha Dafoe exercised her option to purchase 20,000 shares of Shalom Company $1 par value common stock at an option price of $8. The market price per share was $8 on the grant date and $36 on the exercise date. (1) When must the fair value of the option be estimated? (2) Is the market price of the stock on the exercise date most relevant to Dafoe or to Shalom Company pre- necessary, LO3 Preferred Stock Dividends with Dividends in Arrears SE 7. The Ferris Corporation has 2,000 shares of $100, 8 percent cumulative ferred stock outstanding and 40,000 shares of $1 par value common stock out standing. In the company's first three years of operation, its board of directors paid cash dividends as follows: 2010, none; 2011, $40,000; and 2012, $80,000. Determine the total cash dividends and dividends per share paid to the preferred and common stockholders during each of the three years