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It is possible for employee stock options to have a value greater than $0 even if the firm's stock price falls below the stock option's exercise price because:

a. the firm can issue additional shares at a premium

b. employees can adjust the exercise price if necessary

c. employees can exercise the option if the market price of the stock should rise above the exercise price in the future

d. federal law prohibits ESOP plans from downside risk

e. ESOP plans obligate employees to exercise the stock option should the firm's stock price fall below the option's exercise price.

Basic Finance, Finance

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  • Reference No.:- M942643

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