Stock Options in Diluted Share Count

This problem practices dilution mechanics in equity valuation, especially the treasury stock method for stock options. Candidates need to know when options create dilution, how exercise proceeds are treated, and why only the incremental share impact is included in a diluted share count. Interviewers ask this because diluted shares affect per share valuation metrics, including equity value per share and earnings per share, so analysts need to show they understand both the accounting logic and the practical assumptions behind option dilution. It also tests whether you can think through vested versus unvested awards and explain why some practitioners take a more conservative view when estimating dilution.