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Congratulations!
You have completed ERI DLC Course 22: Black-Scholes Valuations.
You should now be able to:
- Recognize the role of stock options in executive compensation
- Identify the pros and cons for a company to use stock options for executive compensation
- Differentiate between ISO (qualified) and NSO (nonqualified) stock options
- Identify three ways to handle stock options that have reached their vesting date
- Specify why obtaining the fair value of a stock option may be necessary
- Identify the Financial Accounting Standards Board rules governing stock options
- Define “intrinsic value” and “time value”
- Differentiate between a European option and an American option
- Identify the elements and assumptions of the Black-Scholes formula
- Recognize how to obtain the risk-free interest rate and volatility measure of a stock
- Differentiate between a call and a put option
- Calculate a value (or values using different assumptions) using the Black-Scholes formula
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