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Questions and Answers
What is the method used to determine the fair value of restricted stock units?
What is the method used to determine the fair value of restricted stock units?
- The Black-Scholes-Merton valuation model
- The expected life of the option
- The market value of the common stock on the date of the grant (correct)
- The exercise price
What factors are involved in determining the compensation expense of stock options using the Black-Scholes-Merton valuation model?
What factors are involved in determining the compensation expense of stock options using the Black-Scholes-Merton valuation model?
- The expected life of the option, stock price volatility, and risk-free interest rate (correct)
- The expected life of the option, stock price volatility, and exercise price
- The expected life of the option, stock price volatility, and forfeiture rate
- The expected life of the option, stock price volatility, and dividend yield
How are forfeitures estimated in the determination of compensation expense for stock options?
How are forfeitures estimated in the determination of compensation expense for stock options?
- Forfeitures are estimated at the end of the vesting period and reduce expense retroactively
- Forfeitures are estimated at the time of grant and reduce expense ratably over the vesting period (correct)
- Forfeitures are not taken into account in the determination of compensation expense
- Forfeitures are estimated at the time of exercise and reduce expense immediately
