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:

Patent

A legal right granted to an inventor, giving them the exclusive right to make, use, or sell their invention for a certain period of time.

Long Run

A period in economic analysis during which factors of production and costs are fully adjustable, allowing all inputs to production to be varied.

Marginal Revenue

This refers to the additional income earned by selling one more unit of a good or service.

Marginal Cost

The additional cost incurred to produce one more unit of a good or service, highlighting the cost variations when adjusting production levels.