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Stock options issued by a company to its employees as a form of compensation are an...

  1. Stock options issued by a company to its employees as a form of compensation are an example of:
  2. warrants.
  3. convertible bonds.
  4. depositary receipts.
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Answer #1

Stock options give the right to employees to buy the stock of the company at a fixed price no matter what the market price is if certain conditions such as the vesting period are met. This is an example of a warrant, which to give the same right to buy a share at the fixed price. So warrant is the correct option.

Convertible bonds are debt instruments that convert into equity or preference share at a fixed conversion ratio while stock option are derivative instruments so they are not the same.

Depository receipts are receipts of stock ownership in those stocks which are not listed on the stock exchange of a given country and need to be invested in through an intermediary known as the depository. These are similar to stocks not stock option.

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