Stock options are a popular employee benefit, and have made millions for some lucky workers. Understanding what stock options can do for you or what this compensation benefit can do for your company may help you make better employment decisions. Take this quiz to see how much you know about stock options.
Why would a stock option be mentioned in a job advertisement?
What is a stock option?
A stock option is an opportunity to buy a set amount of stock for a certain price at any time.
A stock option is an opportunity to buy stock at a certain time.
A stock option is an opportunity to buy a set amount of stock at a certain price and time period.
Why would an employee want stock options?
opportunity for future cash benefit
What is a strike price?
public offering price
stock option price
daily closing price
How long do you hold a stock option?
set by the employer
What is a vesting period?
time period before exercising an option
period after exercising an option
What happens if you leave a company before all of your options have vested?
The options may be exercised regardless of your employment status.
If you worked for more than half of the vesting period, the options may be exercised.
The options will be lost.
If you have the offer of a higher salary or stock options from a company with an uncertain future, what is the best choice?
look at the job listings
Who offers stock options?
privately held companies
publicly held companies
Who is offered stock options?
Why would a start-up company offer stock options?
to conserve cash
too much stock
What must happen for stock options to be profitable?
trade below strike price
trade at strike price
trade above strike price
What is the grant price?
How do employees cash out their stock options?
after a waiting period
after a vesting period
May the employee hold onto the stocks converted from the options?
The employee is not required to immediately sell the stock.
The employee may sell some stock and hold the rest.
Both answers are correct.
Do stock options guarantee a profit for the employee?
usually guarantee a profit
always guarantee a profit
no profit guaranteed
How do stock options allow an employee to share in a company's growth?
stock option values increase
employees get raises
stock option values decrease
Does an employee have to exercise an option?
may exercise some
let option expire
How does a privately held company determine a strike price?