Question

which of the following strategies would never be optimal? a. exercise employee stock options early and sell the stock when no dividends are expected. b. exercise employee stock options early and keep the stock when no dividends are expected. c. exercise employee stock options early and sell the stock when dividends are expected. d. exercise employee stock options early and keep the stock when dividends are expected.

Answer 1

The strategy that would never be optimal is to exercise employee stock options early and keep the stock when no dividends are expected. Therefore, the correct option is B.

Step-by-step explanation:

The strategy that would never be optimal is option b. exercise employee stock options early and keep the stock when no dividends are expected. When no dividends are expected, it means that the stock is not generating any additional income for the investor.

Therefore, holding the stock would not be beneficial and it would be more optimal to sell the stock and invest the funds in an alternative opportunity that generates returns.