An Addition to Employee Compensation Whereby the Corporation Provides a Right

question 174

Multiple Choice

An addition to employee compensation whereby the corporation provides a right to purchase stock at a set price is called

• A)treasury stock.
• B)a stock option.
• C)the conversion privilege.
• D)a call option.

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Definitions:

Option Expense

The cost associated with granting stock options to employees or executives, which companies must expense in their financial statements.

Fair Value Hedge

A hedging strategy aimed at protecting against the risk of changes in the fair value of an asset, liability, or an identified portion of such, that is attributable to a particular risk.

Foreign Exchange Risk

The potential for loss due to fluctuations in currency exchange rates affecting the value of foreign-denominated transactions and investments.

Mexican Pesos

The currency of Mexico, represented symbolically as MXN and used in financial transactions within the country.