Stock Options

Stock Options3

Introduction3

Literature review5

Various types of stock options5

Non-qualified stock options5

Qualified stock options6

Black Scholes Model6

Assumptions6

Explanation7

Various theories in stock options7

Intrinsic value7

Fair value8

Lattice model8

Evidences and Arguments8

Conclusion9

References12

Stock Options

Introduction

Stock options are a matter of concern for almost all the companies. Both parties involved are very careful; no matter they are the beneficiaries or the authority. The term stock options are although referred to be a good or favorable part of the entire rewarding systems, but in few cases there are claims that it is not as fruitful as stated by companies or even assumed by the authorities themselves.

Financial standard board (FASB) has although claimed that they have made various attempts in order to resolve the issues through forming agendas on a different point of times, although this hasn't been pursued long (Lew and Schirger, 1994). It is flexible instrument which provide an organization investors of its own choice (Ross et al, 2011).

But this show that it has been interesting matter for so many years now which is being discussed here and in so many other researches done in past some years. Past also has a rich range of discussions related to the stock options and there treatments (special which are related to taxes).

In this research paper, the researcher is inclined towards creating a debate which will be helpful in getting to know not only the practices in this context, but it will also reveal the new learning from the efforts made in past few years. This study will be useful for the all the stake holders which are interested in the stock options and their offering. This is not only for the compensation department and the employees, but it is also good for the organizations' well being and it's credibility.

Stock options are sometimes even claimed to be not an expense actually occurred, but it is something very important to be considered that all economically significant transactions are in the basic laws of finance (Bodie et al 2003). But organizations are always found be concerned that, is it really a fruitful way to compensate or it is an extra burden for the related organization. This matter is vague due to the fact that cash in hand is not being affected directly. But it actually doesn't mean that nothing is happening at all.

There are various practices which are like; attempts to shelter the beneficiaries (money.cnn.com) and they might also cause an extra expense for the company. Issue like these is very important and core concerns of not only the readers but all the stake holders. Matters of concerns are there, and all the concerned people feel free to comment on the issue and criticize it on a very frequent basis (Ross et al, 2011).

All material provided by the teacher during the session was found useful in building up concept. The course facilitator has made the research paper formulation easier by making all the related material available in the form of:

Presentations

Briefing well in lectures through Oral communication

Referring to useful books

Providing guidelines

Quoting related examples

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