In the 1990s, a Number of Companies Which Had Experienced

Multiple Choice

In the 1990s, a number of companies which had experienced sharp stock price declines, "repriced" previously-awarded employee stock options. Repricing consisted of resetting the options' strike prices to the current stock price (so as to bring them closer to the money) . Suppose a company awards at-the-money stock options to its employees and decides it will reprice them if the stock price falls 50% from the initial award date. Then, the employee stock option is equivalent to a portfolio of

A) A vanilla call and a forward-starting call.
B) A knock-out and a knock-in barrier call option.
C) A knock-out call and a forward-strarting call.
D) A cliquet.