The value of an executive stock option will be lowered if:
A)the volatility of the firm's stock returns increases.
B)the executive improves firm performance causing the stock price to rise.
C)a freeze-out period is required.
D)the firm extends the option expiration date.
E)the strike price is lowered.

Question

Quizplus · Accepted Answer

A freeze-out period restricts the executive from exercising the option for a certain time, potentially lowering its value if the stock price decreases during this period.

The Value of an Executive Stock Option Will Be Lowered