The Value of the Options Awarded to the Executives Is

question 34

Multiple Choice

The value of the options awarded to the executives is much less than the face value to the executives because:

• A)the value to the executive depends on the equity price being greater than the exercise
• Price.
• B)the options must be held beyond the freeze-out period.
• C)a highly undiversified portfolio can have a large drop in value with high variance equities.
• D)All of the above.
• E)The value of the option can never be less than the face value.

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Definitions:

Fraudulent

Fraudulent activities involve deceit or trickery, intentionally carried out for personal gain or to cause financial or personal harm to others.

Demand Instrument

A financial document that requires payment of the amount specified on it upon demand by the holder.

Overdue

A state of being late or delayed in completing a payment, task, or fulfilling an obligation beyond the agreed timeframe.

Demand

The desire of purchasers to buy goods or services at a given price, which, combined with supply, determines market prices.