Which of the Following Was True About Employee Stock Options

question 6

Multiple Choice

Which of the following was true about employee stock options between 1996 and 2004?

• A) The options never had any affect on a company's financial statements
• B) The value of options which were at-the-money when issued had to be expensed on the income statement
• C) The value of options which were at-the-money when issued had to be reported in the notes to the financial statements
• D) Options which were at-the-money when issued did not affect a company's financial statements

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Definitions:

Annual Dividends

Payments made by a corporation to its shareholder members from its profits or reserves on a yearly basis.

Special Dividend

A one-time payment made by a company to its shareholders, usually in the form of cash, stocks or property, outside the regular dividend payments.

Required Return

The minimum return an investor expects to achieve by investing in a particular asset, taking into account the asset's risk.

Dividend Growth

The rate at which a company's dividend payments to shareholders increase over time, indicating the company's growth and stability.