When an Employee Stock Option Is Exercised,which of the Following

question 17

Multiple Choice

When an employee stock option is exercised,which of the following is usually true?

• A) The employee pays the market price for the shares and the company refunds the difference between the market price and the strike price
• B) The company or the company's agent buys stock in the market for the employee
• C) The company issues more shares and sells them to the employee for the strike price
• D) The employee cannot immediately sell the shares

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Definitions:

Stockholders' Equity

The owners' residual interest in a corporation, calculated as the difference between assets and liabilities.

Stockholders' Equity

The amount of capital given to a company by its shareholders, plus retained earnings or minus the company's accumulated losses.

Balance Sheet

A financial statement that provides a snapshot of a company's financial position, showing assets, liabilities, and equity at a specific point in time.

Common Stock

Common stock represents ownership shares in a corporation, providing voting rights and potential dividends to shareholders.