We discussed the advantages and disadvantages of option repricing for Employee Stock Options (ESOs). What would be the advantages and disadvantages to reprice ESOs following a market-wide crash? Do you think it is advisable to reprice ESOs following a sharp decline in the firm's stock price due to a mistake in the firm's overall strategy? Why? (4 marks)

Describe how equity can be thought of as a call option. Develop a numerical example. (4 marks)