Van Winkle received stock options from his employer, RiP, Inc. The options entitled Van to purchase 100 shares of RiP common stock at an exercise price of $20 per share. The options vested when the market price of the stock was $32 per share. Van exercised his options on the vesting date. He sold the stock several months later for $38 per share. What is the total bargain element on Van's stock?

Total bargain element = $1,200

Explanation:

Given:

Number of share = 100

Exercise price = $20 per share

Market price of the stock = $32 per share

Sale price per stock = $38

Total bargain element on Van's stock = ?

Computation of  Total bargain element:

Total bargain element = (Market price of the stock - Exercise price)Number of share

Total bargain element = ($32 - $20)100

Total bargain element = ($12)100

Total bargain element = $1,200

competition has an impact on prices of items being sold such that when competition is high, prices can get lower. this is because you want to keep up with other players and present your items as the affordable kind. when competitiion is low, prices are higher because your demand is high