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:

Hierarchical Structures

Organizational layouts that rank positions in a top-down order, where authority flows from the top position to the lower ones in the chain of command.

Company Policies

Formal guidelines and rules established by businesses to outline procedures, operations, and standards for employees and management.

Acquisition

The process by which one company takes over another company, either through direct purchase, exchange of shares, or other means, effectively gaining control over the acquired entity.

Ownership Stakes

The shares or interest that an individual or entity holds in a company, indicating the level of ownership.