The Exercise Price for Stock Option Plans on the Grant

question 17

Multiple Choice

The exercise price for stock option plans on the grant date is

• A)always higher than the market price of the underlying shares.
• B)always lower than the market price of the underlying shares.
• C)usually lower than the market price of the underlying shares.
• D)usually equal to or higher than the market price of the underlying shares.

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Definitions:

Depreciation Expense

The allocation of the cost of an asset over its useful life to account for declines in value over time.

Double-declining-balance

An accelerated depreciation method that doubles the normal depreciation rate.

Salvage Value

The estimated residual value of an asset at the end of its useful life, representing what it could potentially be sold for or scrapped.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, often used to determine a company's actual value.