Which of the Following Statements Is True of Stock Option

question 166

Multiple Choice

Which of the following statements is true of stock option plans?

• A) Compensation expense is recorded only if the option price is less than the stock's fair value on the grant date.
• B) Compensation is measured on the date the stock is issued.
• C) The issued stock is recorded at the market price, not the option price.
• D) They all serve to compensate employees.

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Definitions:

Cash

Liquid assets held by a company, used to settle debts, purchase goods and services, or meet immediate needs; a fundamental indicator of financial health.

Debt Ratio

A financial ratio that measures the proportion of a company's total debt to its total assets, indicating the company's leverage.

Liabilities

Financial obligations or debts owed by a business to external parties or individuals, which must be settled over time through the transfer of economic benefits.

Equity

The ownership interest in a company of its shareholders; it represents the amount of assets that would be returned to shareholders if all the company's debts were paid off.