The purpose of backdating stock options is to give the stock-option holder
A) large payout on his or her birthday.
B) tax-free investment.
C) chance to diversify his or her stock portfolio.
D) sure profit on the options.

Question

Quizplus · Accepted Answer

The purpose of backdating stock options is to ensure a sure profit on the options. By backdating the options to a date when the stock price was lower, the option holder can purchase the stock at the lower price and sell it at the current higher price, thus ensuring a profit. This practice is illegal and unethical.

The Purpose of Backdating Stock Options Is to Give the Stock-Option