When an Employee Stock Option Is Exercised,which of the Following

question 17

Multiple Choice

When an employee stock option is exercised,which of the following is usually true?

• A) The employee pays the market price for the shares and the company refunds the difference between the market price and the strike price
• B) The company or the company's agent buys stock in the market for the employee
• C) The company issues more shares and sells them to the employee for the strike price
• D) The employee cannot immediately sell the shares

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Definitions:

Subjective Judgment

The use of personal opinions and feelings rather than external evidence or objective criteria to make decisions or evaluations.

Discounted Cash Flow

An appraisal technique that calculates an investment's worth by discounting its expected future cash flows to account for the time value of money.

Large Projects

Significant capital investments undertaken by a company to expand operations, enter new markets, or develop new products.

Net Operating Working Capital

Net Operating Working Capital is the difference between a company's operating current assets and its operating current liabilities, indicating short-term financial health.