Which of the following is/are not true concerning an employee stock options' time value element?
a. The time value element results from the possibility of increases in the market price of the stock during the exercise period.
b. Time value is larger the longer the exercise period and the more volatile the market price of the stock.
c. A stock option whose exercise price exceeds the current market price has economic value because of the possibility that the market price will exceed the exercise price on the exercise date.
d. A stock option whose exercise price has zero intrinsic value has economic value because of the possibility that on the exercise date there would be positive intrinsic value.
e. Stock options with exercise prices exceeding the current market price of the stock have a higher value, other things equal, than stock options with exercise prices less than the current market price of the stock.
E
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