A Company Issues an Option Grant with an Outperformance Feature,against

question 17

Multiple Choice

A company issues an option grant with an outperformance feature,against the S&P 500.Assume S&P 500 = 950,S = 22,k = 25,σ = 0.25,r = 0.06,and 5 years until expiration.The S&P 500 has a dividend yield of 2%,standard deviation of 18.0% and a 0.30 correlation coefficient with the stock.What is the value of the outperformance feature?

• A) $0.99
• B) $1.31
• C) $1.59
• D) $1.72

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Definitions:

Recognition

The act of acknowledging or giving credit to someone for their achievements, contributions, or status.

Employees' Productivity

The efficiency and effectiveness with which employees perform their tasks, contributing to the organization's goals.

Poor Management

Ineffective or inefficient leadership and organizational practices that can lead to decreased productivity, morale, and overall success.

Co-Worker Hostility

Refers to negative behaviors and attitudes displayed by employees towards their colleagues, leading to a tense and uncooperative work environment.