Early exercise refers to the exercise of an option prior to the end of the contractual term. It is described as the expected ratio of stock price to exercise price at the time of exercise. Exercise multiple – also known as the suboptimal exercise factor, the exercise multiple is an assumption about "early exercise" behavior or patterns based on stock-price appreciation rather than the time that has elapsed since the grant date.Vesting period – the shortest period until the option can be exercised.Contractual term of the option – the maximum period for which the option can be held.A simple lattice model might incorporate an array of values for each of the four inputs related to employee exercise behavior: The Black-Scholes model reduces all possible employee exercise patterns to a weighted-average that is used as a single input-the expected term-while lattice models can incorporate a range of inputs describing possible exercise behavior. In a similar manner, lattice models can incorporate far more detailed assumptions about employees' future exercise patterns than the Black-Scholes model. Transfers and servicing of financial assets Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences Business combinations and noncontrolling interestsĮquity method investments and joint ventures
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