Hull:Options,Futures,andOtherDerivatives,NinthEditionChapter16:EmployeeStockOptionsMultipleChoiceTestBank:Questions1.Whichofthefollowingistrue?A.AnemployeestockoptionisusuallyheldtomaturityB.AnemployeestockoptiontendstobeexercisedearlierthananOTCoptionwiththesametermsC.AnemployeestockoptionstendstobeexercisedlaterthananOTCoptionwiththesametermsD.Employeestockoptionsareusuallyexercisedasearlyaspossible2.WhichofthefollowingisNOTusuallytrueaboutemployeestockoptions?A.ThereisavestingperiodB.TheycanbesoldtootheremployeesC.Theyareoftenat-the-moneywhenissuedD.Theirvalueiscurrentlyachargetotheincomestatement3.Whattermisusedtodescribelossesshareholdersexperiencebecausetheinterestsofmanagersarenotalignedwiththeirown?A.AgencycostsB.BackdatingscandalsC.DilutionD.Incomestatementexpense4.Whichofthefollowingaretrueofemployeestockoptions?A.TheyarecommonlyvaluedasthoughtheyareregularAmericanoptionsB.TheyarecommonlyvaluedasthoughtheyareregularAmericanoptions,butwithareducedlife.C.TheyarecommonlyvaluedasthoughtheyareregularEuropeanoptionD.TheyarecommonlyvaluedasthoughtheyareregularEuropeanoptionsbutwithareducedlife.5.Whichofthefollowingwastrueaboutemployeestockoptionspriorto1995?A.Theoptionsneverhadanyaffectonacompany’sfinancialstatementsB.Thevalueofoptionswhichwereat-the-moneywhenissuedhadtobeexpensedontheincomestatementC.Thevalueofoptionswhichwereat-the-moneywhenissuedhadtobereportedinthenotestothefinancialstatementsD.Optionswhichwereat-the-moneywhenissueddidnotaffectacompany’sfinancialstatements6.Whichofthefollowingwastrueaboutemployeestockoptionsbetween1996and2004?A.Theoptionsneverhadanyaffectonacompany’sfinancialstatementsB.Thevalueofoptionswhichwereat-the-moneywhenissuedhadtobeexpensedontheincomestatementC.Thevalueofoptionswhichwereat-the-moneywhenissuedhadtobereportedinthenotestothefinancialstatementsD.Optionswhichwereat-the-moneywhenissueddidnotaffectacompany’sfinancialstatements7.Whichofthefollowingwastrueafter2005?A.Theoptionsneverhadanyaffectonacompany’sfinancialsta...
