In a stock option plan, if the market price of the stock exceeds the exercise price, _____.
A) employees can then exercise the option and buy the stock
B) employees have to purchase the stock at the new price
C) employees have to forfeit their claims to the company shares
D) employees will make a loss through stock ownership

Question

Quizplus · Accepted Answer

When the market price of the stock exceeds the exercise price, employees can exercise their option to buy the stock at the exercise price and make a profit by selling the stock at the market price. This is the whole point of a stock option plan - to give employees the opportunity to benefit from the company's success by buying shares at a lower price and selling them at a higher price.

In a Stock Option Plan, If the Market Price of the Stock