GCC Corporation Is Planning to Issue Options to Its Key

question 26

Multiple Choice

GCC Corporation is planning to issue options to its key employees, and it is now discussing the terms to be set on those options. Which of the following actions would decrease the value of the options, other things held constant?

• A) GCC's stock price suddenly increases.
• B) The exercise price of the option is increased.
• C) The life of the option is increased, i.e., the time until it expires is lengthened.
• D) The Federal Reserve takes actions that increase the risk-free rate.
• E) GCC's stock price becomes more risky (higher variance).

---

Definitions:

Methodology Section

Part of a research document that outlines the methods and approaches used in conducting the study, including data collection and analysis.

Setting

The time and place in which the events of a study, narrative, or experiment occur, providing context to the subjects or actions being examined.

Lazy Word Beginnings

Phrases or words that are overused at the start of sentences, making the writing seem repetitive or unengaging.