Assertion: ESOP Offer to employees provides mutual benefits to both firm and employees.
Reasoning: It enables firm to enjoy higher efficiency, low labour turnover, better industrial locations, low floatation cost etc whereas employees become shareholders and share the profits of the company.
Answer & explanation
Correct answer: option 1
Stock options or offering shares to the employees has gained much popularity in many countries of the world. This method enables employees to become shareholders and share the profits of the company leading to: a) Higher efficiency b) Low labour turnover c) Better industrial locations d) Low floatation cost e) Wider/higher generation of funds.