Answered: Share options granted by a corporation…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 1Q: Define each of the following terms: a. Proxy; proxy fight; preemptive right; classified stock;...

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Question

Share options granted by a corporation are recorded as expense on the number of options that

a are initially granted.

b are vested.

c are eventually exercised.

d are expected to be exercised.

Non-market based performance conditions include vesting based on achieving all of the following except

a achieving a specific growth in revenue

b achieving a specific growth in net profit

c achieving a specific increase in EPS

d achieving a specific target share price

Statement 1: Share options granted that vest base on performance condition to the key employees of the business wherein they need to achieve an increase in the share price will recognize fully the compensation expense over the vesting period regardless the condition is met or not.

Statement 2: Share options that are granted without fair value on the grant date will recognize compensation expense within the vesting period only.

a True,False

b False, True

c True, true

dFalse, false

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