Which of the Following Are True About Employee Stock Options

question 2

Multiple Choice

Which of the following are true about employee stock options? choose three)

• A) They are never exercised early if the company does not pay a dividend.
• B) They are commonly valued as though they are regular American options.
• C) They are commonly valued as though they are regular American options, but with a reduced life.
• D) They are commonly valued as though they are regular European options, but with a reduced life.
• E) They are never worth more than regular American options with the same strike price and time to maturity.
• F) There was a period of time during which their value had to be reported, but was not included on the income statement.

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Definitions:

State Law

consists of the laws and regulations enacted by the legislative bodies of individual states.

Passed Through

A term often used in finance and taxation to describe income, losses, or tax benefits transferred from one entity to another, such as in a pass-through entity.

Limited Liability Company

A business configuration that combines the beneficial limited liability of a corporation with the pass-through taxation system of partnerships or sole proprietorships.

Taxes

A compulsory financial charge or some other type of levy imposed upon a taxpayer by a governmental organization in order to fund government spending and various public expenditures.