Which of the Following Is/are Not True Concerning an Employee

question 18

Multiple Choice

Which of the following is/are not true concerning an employee stock options' time value element?

• A)The time value element results from the possibility of increases in the market price of the stock during the exercise period.
• B)Time value is larger the longer the exercise period and the more volatile the market price of the stock.
• C)A stock option whose exercise price exceeds the current market price has economic value because of the possibility that the market price will exceed the exercise price on the exercise date.
• D)A stock option whose exercise price has zero intrinsic value has economic value because of the possibility that on the exercise date there would be positive intrinsic value.
• E)Stock options with exercise prices exceeding the current market price of the stock have a higher value, other things equal, than stock options with exercise prices less than the current market price of the stock.

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Definitions:

Birth Defects

Abnormalities of structure, function, or body metabolism present at birth that may lead to physical or mental disabilities.

Anemia

A medical condition characterized by a deficiency in the number or quality of red blood cells, which can lead to fatigue and other symptoms due to a lack of oxygen transport in the body.

Basal Metabolic Rate

The amount of energy expended while at rest in a neutrally temperate environment, necessary to maintain the function of the body's vital organs.

Resting Energy Expenditure

The amount of energy, measured in calories, that a person's body needs to maintain basic physiological functions while at rest.