Stock Option Plans

question 59

Multiple Choice

Stock option plans:

• A) give an employee the right to buy stock during a specified period of time or under other specified conditions.
• B) are being considered too hazardous after the Enron collapse in 2002
• C) are restricted to executives
• D) are always based on individual performance
• E) all of the above are true

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Definitions:

Profit

The financial gain achieved when the revenue earned from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.

Wage

Payment to a worker from an employer for labor or services, usually expressed as an hourly, daily, or piece rate.

Marginal Revenue

The change in total revenue from an additional unit sold.

Marginal Cost

The cost of producing one additional unit of a good or service, important in decision-making processes about production levels.