这题

问题如下：

If the recent changes in the volatility of the company’s stock persist, it will most likely affect the company’s compensation expense for:

选项：

A.executives only. B.non-executive employees only. C.both non-executive employees and executives.

解释：

Solution

A is correct. Only the executive stock option plan is affected by volatility of the company’s stock. The volatility affects the initial valuation of the stock options granted, for example through the use of the Black–Scholes model to determine the fair value of the options. The initial valuation of the options determines the expense recognized. Compensation expense for stock grants is based on the fair market value of the stock on the day of the grant and is not affected by the stock’s volatility.

B is incorrect. Stock options are directly affected by volatility, but stock grants are not.

C is incorrect. Stock options are directly affected by volatility, but stock grants are not.