
ESOs: Introduction
by David HarperIn this tutorial we review the accounting and valuation treatment of employee stock options (ESOs) and illustrate the best ways for investors to incorporate them into their analysis of stock. In the next section, we begin with a summary of the accounting treatment of ESOs, and then in the third and fourth sections we progress into a review of the primary optionspricing models: the BlackScholes and its likely successor in 2005, the binomial model. In the fifth and sixth sections, we will consider adjustments you can make to incorporate the cost impact of stock options into your equity valuations.
ESOs: Accounting For Employee Stock Options

RELATED TERMS

Employee Stock Option  ESO
A stock option granted to specified employees of a company. ESOs ... 
Option Pricing Theory
Any model or theorybased approach for calculating the fair ... 
LatticeBased Model
An option pricing model that involves the construction of a binomial ... 
Trinomial Option Pricing Model
An option pricing model incorporating three possible values that ... 
Black's Model
A variation of the popular BlackScholes options pricing model ... 
Incorporation
The process of legally declaring a corporate entity as separate ...
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