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

Question

Quizplus · Accepted Answer

Stock options granted to executives, including those at BMI Industries, often have a set exercise price. If the market price falls below this exercise price, the options might indeed be "underwater" and thus not profitable to exercise at that moment. However, they are not necessarily worthless as long as they have not expired, since the stock's value could rise above the exercise price before the options' expiration date.

The CEO of BMI Industries Has Been Granted Some Stock