ABC Corporation reported net income of $200,000 in 2017 and had 40,000 shares of common stock outstanding throughout the year. Also outstanding all year were 1,000 shares of cumulative preferred stock, each convertible into 2 shares of common. The preferred stock pays an annual dividend of $5 per share. On April 1, 2017, the company issued 35,000 options to purchase common stock at $10 per share. The average market price of the stock during the year was $15. ABC's tax rate is 30%. 1 i F 1- BIO- Short Answers. Why are stock options an expense for companies? What is the impact of issuing stock options on existing shareholders? I in HT- BIO