Which one of these is not a reason why executives place less value on employee stock options than their face value would indicate?
A)The option's value depends on the stock price exceeding the exercise price.
B)Options must generally be held for a period of time.
C)Options may create a highly undiversified portfolio for the executive.
D)Options always create taxable income for the executive when granted.
E)Options could be out of the money.

Question

Quizplus · Accepted Answer

This statement is not true as options do not always create taxable income for the executive when granted. There are certain types of options such as incentive stock options that provide tax benefits to the executive if certain conditions are met. Therefore, D is not a reason why executives place less value on employee stock options than their face value would indicate.

Which One of These Is Not a Reason Why Executives