Which of the following is/are true concerning an employee stock options' time value element?

Question

Quizplus · Accepted Answer

All of the statements are true. The time value element of employee stock options refers to the potential increase in the market price of the stock during the exercise period. The time value is larger when the exercise period is longer and the market price of the stock is more volatile. A stock option whose exercise price is higher than the current market price can still have economic value because there is a possibility that the market price will exceed the exercise price on the exercise date. Finally, even a stock option whose exercise price has zero intrinsic value can still have economic value because there is a possibility of positive intrinsic value on the exercise date.

Which of the Following Is/are True Concerning an Employee Stock