The Accounting for Employee Stock Options Does Not Involve

question 76

Multiple Choice

The accounting for employee stock options does not involve

• A)the measurement of the fair value of 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 market price volatility of the stock, the expected dividends, and the risk-free interest rate.
• B)calculating total compensation cost as the number of options the firm expects to vest times the fair value per option.
• C)factoring in the firms use of their historical experience on forfeitures due to employees terminating employment prior to vesting to estimate the expected number of options that will vest.
• D)amortizing the fair value of the stock options on the date of the grant over the requisite service period, which is the expected period of benefit.
• E)the firm recomputing the fair value of the option at each succeeding balance sheet date to reflect new information about stock prices, volatility, dividend yield, or risk-free interest rates.

Understand the implications of research findings for practical interventions in societal issues.

Understand the fundamentals of statistical tests and the interpretation of probability values.

Recognize the role and limitations of different research methods, including case studies, experiments, and correlation studies.

Understand the concept of generalizability in psychological research.

---

Definitions:

Net Present Value

A calculation that determines the value of a series of future cash flows in today's dollars, taking into account the time value of money.

Automated Equipment

Equipment that operates with minimal human intervention, using technology to perform tasks that would otherwise require manual effort.

Attractive Investment

An investment that is appealing due to its potential for favorable returns or its alignment with investment criteria.

Simple Rate

A basic method for calculating interest or return, often expressed as a percentage over a period of time.