Asked by linda farran on Jul 15, 2024
Verified
The value assigned to stock warrants for a noncompensatory stock option plan is calculated as
A) the excess of the quoted market price over the option price for the specified number of shares on the measurement date
B) the excess of the fair value of the employee services over the cash compensation paid over the required service period
C) zero
D) the excess of the quoted market price over the option price for the specified number of shares on the date that the options are exercised
Stock Warrants
Certificates granting the holder the right to purchase shares of stock at a specified price before a set expiration date.
Option Price
The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.
- Differentiate between compensatory stock option plans and noncompensatory stock option plans.
Verified Answer
CS
Christopher SkrotzkiJul 21, 2024
Final Answer :
C
Explanation :
For a noncompensatory stock option plan, the value assigned to stock warrants is calculated as zero because these plans are typically designed not to provide additional compensation to employees but rather to allow them to participate in the equity of the company under terms that are generally available to all shareholders.
Learning Objectives
- Differentiate between compensatory stock option plans and noncompensatory stock option plans.
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