Alyssa, the financial officer at Doone & Smithfield, encourages the human resource manager to consider using stock options as incentive pay for all employees. The human resource manager cautions that employees could become upset if the options don't turn out to be as valuable as cash. Which statement supports this concern?

A) Stock options are not profitable to employees.
B) Option owners must exercise the options, no matter what the market price.
C) Employees may not purchase their employer's stock.
D) Offering stock options discourages employees from thinking like owners.
E) Stock prices in the market may fall below the exercise price of the options.

Question

navdeep kaur123 · Accepted Answer

Final Answer : E, Explanation :  This statement supports the concern that employees could become upset if the options don't turn out to be as valuable as cash because if the stock prices in the market fall below the exercise price of the options, the options become worthless, and the employees do not receive any financial benefit from them.

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