BLW Corporation Is Considering the Terms to Be Set on the Options

question 13

Multiple Choice

BLW Corporation is considering the terms to be set on the options it plans to issue to its executives. Which of the following actions would decrease the value of the options, other things held constant?

• A) the exercise price of the option is increased.
• B) the life of the option is increased, i.e., the time until it expires is lengthened.
• C) the federal reserve takes actions that increase the risk-free rate.
• D) blw's stock price becomes more risky (higher variance).
• E) blw's stock price suddenly increases.

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Definitions:

Increased Outputs

indicate a higher level of production or activities, often resulting from efficiency improvements or higher demand.

Constant Amount

A fixed value that does not change over time or under varying circumstances.

Socialism

Socialism is a political and economic theory advocating for collective or governmental ownership and administration of the means of production and distribution of goods.

Private Hands

Ownership or control by private individuals or corporations, as opposed to public or government ownership.