Stock options:
A) do not lose value even if the stock price ends up lower.
B) are nonmonetary forms of compensation.
C) give an owner the right to buy shares of stock at a future date at a fixed price.
D) provide one-time or lump-sum payments to employees who meet specific performance targets.
E) offer workers to purchase stock in their employing companies whenever they chose to.

Question

Quizplus · Accepted Answer

Stock options give an owner the right to buy shares of stock at a future date at a fixed price. Option A is incorrect because stock options do lose value if the stock price ends up lower. Option B is incorrect because stock options are a form of compensation that has monetary value. Option D is incorrect because stock options are not a one-time or lump-sum payment but rather a long-term incentive for employees. Option E is incorrect because employees do not have the option to purchase stock in their employing company whenever they choose to; instead, they have to wait for the designated time and price set by the stock option agreement.

Stock Options