What price would like to see the stock price reach

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If you were in Jimmy's shoes and are considering taking a job at Moog, how would you assess the following stock option grant? The strike and stock price are $30, volatility is 40%, the riskless rate is 1.5%, the vesting period is 4 years, the term is 10 years and the expected life is 5 years.

Problem a) What price would you like to see the stock price reach at the minimum after you are vested to make the stock options worth considering?

Problem b) Discuss the implications if the stock price is $60 when your options vest. Consider the strike price, option price at grant and stock price at vesting.

Problem c) If Jimmy get 1000 options, use the same criteria as in 1, and the stock price is $60 at exercise, show the financial statement effects entry at issuance of the options and at exercise.

Reference no: EM132969627

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