Employee Stock Options

question 359

Multiple Choice

Employee stock options:

• A) Have a maximum life of 5 years.
• B) Generally cannot be exercised for the first 4 years.
• C) Generally have a 5-year vesting period.
• D) Are usually forfeited if an employee leaves a firm shortly after the options are granted.
• E) Can be actively traded on the open market once they are vested.

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Definitions:

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific business segment, product, or operation without any ambiguity.

Net Operating Income

The total profit of a business after operating expenses are deducted but before interest and taxes are subtracted.

Price Hike

An increase in the price of goods or services, often due to factors such as inflation, increased demand, or rising input costs.

Target Costing

A pricing strategy in which a product's selling price is determined by market conditions, and the production cost is managed to ensure profitability.