Regarding Employee Stock Options, Which of the Following Is/are True

question 104

Multiple Choice

Regarding employee stock options, which of the following is/are true?

• A)Firms compute a fair-value-based measure of employee stock options on the date of the grant using an option-pricing model that incorporates information about the current market price, the exercise price, the expected time between grant and exercise, the expected volatility of the stock, the expected dividends, and the risk-free interest rate.
• B)Total compensation cost is the number of options the firm expects to vest times the value per option.
• C)Firms amortize total compensation cost over the requisite service period, which is the expected period of benefit.
• D)The requisite service period is usually the period between the grant date and the vesting date.
• E)Firms do not typically remeasure most types of stock options after the initial grant date.

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Definitions:

Disappointment

The feeling of dissatisfaction that arises from a gap between expectations and the actual performance or outcome of a product or service.

Performance

The action or process of carrying out or accomplishing an action, task, or function.

Characteristic

An attribute or quality defining or distinguishing a person, place, or thing, often used to describe specific features or traits.

Dissatisfied

The feeling of not being satisfied or content with a product, service, or outcome.