Which of the Following Statements Is Untrue with Regards to Stock

question 19

Multiple Choice

Which of the following statements is untrue with regards to stock options as a form of incentives for employees?

• A)A stock option is a contract that allows the employee to purchase a share of the firm's stock at a specified price at any time up till a preset expiration date
• B)Option grants to employees typically come with a vesting period
• C)Since options are worth more if the stock price is higher, the employee has little reason to care about the firm's performance
• D)At any point after the end of the vesting period and prior to expiration, an employee can exercise their option and sell pocketing the difference between stock and exercise price
• E)If a firm's share price falls below the exercise price at expiration, the options may be worthless to the employee

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Definitions:

System Reliability

The probability that a system will perform its intended function without failure under specified conditions for a designated period of time.

Redundant Check

A method of error detection which involves adding additional data or using duplication to ensure information accuracy and reliability.

Reliability Ratings

Measurements or estimates that indicate the dependability or consistency of a product, service, or system's performance.

6-Sigma Standards

A set of techniques and tools for process improvement that aims to reduce defects and variability in manufacturing and business processes.