20. Employee stock options are often reset in their strike when the stock price of the company has declined over a period of time. That is, although the options are initially issued at-the-money, their strike prices are lowered if they become deep underwater, that is, if a sharp decline in stock prices has taken place since the initial grant. Why do you think companies reset their employee option strikes? What path-dependent option have you learned about that most closely resembles this practice?
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