The value of the options awarded executives is much less than face value to the executives because:
A) the value to the executive depends on the stock price being greater than the exercise price.
B) the options must be held beyond the freeze-out period.
C) a highly undiversified portfolio can have a large drop in value with high variance stocks.
D) All of these.
E) None of these.

Question

Quizplus · Accepted Answer

The value of stock options to executives is less than face value because they depend on the stock price exceeding the exercise price, must be held beyond a freeze-out period, and are risky due to lack of diversification.

The Value of the Options Awarded Executives Is Much Less