If a company distributes stock to employees by granting stock options, employees exercise the option when they

A) purchase the stock.
B) sell the stock.
C) retain the stock.
D) distribute the stock.
E) liquidate the stock.

Stock Options

Financial derivatives that give the holder the right, but not the obligation, to buy or sell shares of a company at a specified price within a set time frame.

Granting Stock

The process by which a company offers shares of its stock to employees as part of their compensation package or as a reward.

Exercise Option

The act of implementing the right to buy or sell an asset under the terms of an option contract.