In the context of stock ownership,what is meant by "backdating" a stock option?
A) reaping windfall in the stock market by selling stock based on company's nonpublic information
B) falsifying numbers in the company's annual report to hide losses and inflate the stock prices
C) buying a company's stock just before the date of key product launch
D) changing the date or price in an option agreement so that the option holder can buy stock at a bargain price
E) hiding losses and inflating the recorded value of revenues to boost the price of the company's stock

Question

Quizplus · Accepted Answer

Backdating a stock option involves changing the date or price in an option agreement so that the option holder can buy stock at a bargain price, which is illegal. This allows the option holder to potentially make a larger profit when selling the stock.  This practice was common among some corporations in the early 2000s and led to several high-profile scandals.

In the Context of Stock Ownership,what Is Meant by "Backdating