In a stock option, the price at which the employee may buy the shares is the:
A)market price.
B)exercise price.
C)price at the grant date.
D)there is no price; they are given the shares as compensation.

Question

Quizplus · Accepted Answer

The price at which the employee may buy the shares is called the exercise price. It is set at the time the stock option is granted and is typically lower than the current market price in order to provide an incentive for the employee to hold onto the shares and benefit from potential future price increases.

In a Stock Option, the Price at Which the Employee