Recently, numerous firms have embraced the knock-out option to minimize loss of funds and to ensure that the capital invested to propel business. One of the important strategies used by these firms is providing the stock option to its employees. Jeremy Goldstein research plus his intuitional findings provide a hunchback that not all assumptions employed in all investments would yield the expected.
As seen from the concept of growth stock and value stock, it is clear that a detailed supported information can provide a clearer picture of what to anticipate when a move to undertake an investment idea is undertaken. Jeremy Goldstein plays a paramount role in explaining the impact stock option and the value returns in a business enterprise which is key in calculating the stock state of the enterprise in question.
Researchers of Rethinking Stocks Returns, defined value stocks as those stocks which are defined by their high book return ratios compared to the market return ration while growth stock is defined as the stock with low book ratio and a high market value ratio. Thus, the value of stocks may drop significantly and this may limit the employees seeking to invest and employees avoid this as way of compensation, poses as problems. This is contributed by the fact that the employees tend to think that the prevailing marketing conditions in the economy may render the stocks worthless.
Jeremy Goldstein demonstrates a couple of advantages accompanying the stock option as way of compensation. The advantages include higher salaries and better insurance coverage to the employees. The option is easily and better understood by the employees unlike other forms of stock option. If the employees agrees to this form of compensation, they give out their best to ensure a success of the organization. Adoption of this option of compensation reduces the obstacles that are associated to the stock option.
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