The Value of an Executive Stock Option Will Be Lowered

question 36

Multiple Choice

The value of an executive stock option will be lowered if:

• A)the volatility of the firm's stock returns increases.
• B)the executive improves firm performance causing the stock price to rise.
• C)a freeze-out period is required.
• D)the firm extends the option expiration date.
• E)the strike price is lowered.

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Definitions:

Classical Conditioning

A learning process that occurs through associations between an environmental stimulus and a naturally occurring stimulus, leading to a learned response.

Instinct

A natural and usually unchanging behavior pattern exhibited by animals when they encounter specific triggers.

Conditioned

Describes a response that has been learned through the process of conditioning, where a neutral stimulus becomes associated with a meaningful stimulus, eliciting a learned response.

Learning

The process of acquiring new understanding, knowledge, behaviors, skills, values, attitudes, and preferences.