Which One of the Following Is an Argument Against Repricing

question 52

Multiple Choice

Which one of the following is an argument against repricing employee stock options?

• A)ESO's are originally issued with positive intrinsic value so there is no reason to reprice.
• B)Employees have more incentive when options are "under water".
• C)Repricing is a reward for failure.
• D)It is unnecessary to reprice as ESOs expire quickly.
• E)Repricing affects the market price of the firm's stock for all shareholders.

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Definitions:

Fair Value

The gain expected to be received from an asset disposal or the amount necessary to cover a liability in a mutual transaction among market counterparts at the estimated date.

Equipment

Equipment consists of the tangible operational assets used by a business to conduct its operations and generate income.

Consolidated Balance Sheet

A financial statement that presents the assets, liabilities, and shareholders' equity of a parent company and its subsidiaries as one single entity.

Fair Value

An estimation of the market value of an asset or liability, determined based on the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.