The CEO of D'Amico Motors has been granted some stock options that have provisions similar to most other executive stock options.If D'Amico's stock underperforms the market, these options will necessarily be worthless.

Question

Quizplus · Accepted Answer

Stock options granted to executives, including those at D'Amico Motors, typically have a set exercise price. If the company's stock underperforms the market but remains above the exercise price, the options can still hold value, allowing the executive to purchase shares at a price lower than the market value.

The CEO of D'Amico Motors Has Been Granted Some Stock