You have taken a management position in Ocean Cuisines plc that just went public last year.

You have taken a management position in Ocean Cuisines plc that just went public last year. The company’s restaurants specialize in seafood dishes. A concern you had was that the restaurant business is risky.

During your interview process, one of the benefits you heard was employee stock option. Upon signing your employment contract, you obtained options with a strike price of £65 for 10,000 shares of company stock.  As is fairly common, your stock options have a three-year vesting period and a 10-year expiration, meaning that you cannot exercise the options for a period of three years and you lose them if you leave before they vest. So your employee stock options are European for the first three years and American afterward. You cannot sell the option nor can you enter into any sort of hedging. Ocean Cuisines is currently trading at £40 per share, a slight increase from the initial offering price last year. You estimated that the annual average standard deviation for restaurant company stock is 20 percent. Since Ocean Cuisines is a new restaurant chain you decide to use a 25percent standard deviation in your calculations. You expect no dividends will be paid for the next 10 years. A three-year Treasury note currently has a yield of 3.4% and 10 year Treasury note has an yield of 6%.

Don't use plagiarized sources. Get Your Custom Essay on
You have taken a management position in Ocean Cuisines plc that just went public last year.
Just from $13/Page
Order Essay

Suppose that in three years, company’s stock is trading at £55. At that time, should you keep the options or exercise immediately? What are some of the important determinants in making such a decision? 

Calculate your order
Pages (275 words)
Standard price: $0.00
Client Reviews
4.9
Sitejabber
4.6
Trustpilot
4.8
Our Guarantees
100% Confidentiality
Information about customers is confidential and never disclosed to third parties.
Original Writing
We complete all papers from scratch. You can get a plagiarism report.
Timely Delivery
No missed deadlines – 97% of assignments are completed in time.
Money Back
If you're confident that a writer didn't follow your order details, ask for a refund.

Calculate the price of your order

You will get a personal manager and a discount.
We'll send you the first draft for approval by at
Total price:
$0.00
Power up Your Academic Success with the
Team of Professionals. We’ve Got Your Back.
Power up Your Study Success with Experts We’ve Got Your Back.
Live Chat+1(978) 822-0999EmailWhatsApp

Order your essay today and save 20% with the discount code GOODESSAY