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

---

Definitions:

Nonrenewable Natural Resources

Natural resources such as fossil fuels and minerals that do not replenish on a human time scale and hence are finite.

Fixed Supply

A situation where the quantity of a good or resource available does not change in response to its price.

Fish

Aquatic animals that are typically harvested either from the wild (fishing) or from farms (aquaculture) for food, recreational, or commercial purposes.

Open Ocean

The vast, deep, and relatively unexplored parts of the sea, far from land and typically beyond national jurisdiction.