Conflicting information in regard to volatility and stock option grants.

CFA Level II
#1

Using solely CFAI material for what I read.

In Ch 17 EOC questions #13 they ask if volatility assumption changes would have an effect on stock option grants. Stock options are affected by volatility but from what I understand stock option grants aren’t. The answer here says with lower volatility the expenses would be lower.

However in TT 4 Galaxy there is a question regarding what compensation would be affected by stock volatility. I answered it incorrectly based off the EOC question I did. The answer says that stock grants aren’t affected by volatility but stock options are.

I’m not sure which is right, personally I think stock grants should be affected by volatility because if stock is volatile and increases rapidly before grant date then clearly the related exp from it will be higher versus had the volatility not increased the stock price.

Or is the confusion because a stock option grant doesn’t mean stock grant? And instead means stock options granted? But aren’t stock options for the most part given as additional compensation anyways?

#2

stock volatility as in itself only.

of course, volatility affects stock price, but not knowing the degree and direction, you won’t have anything to say about stock price.

simply put, having a larger volatility affects stock options, but not grants.

#3

Stock option =/= stock.

That’s it.

Hence stock option grant = /= stock grant

#4

Stock grant: they “granted” you with stock.

Stock Option: they “granted” you with the stock OPTION.

#5

So is it safe to assume then that stock option grant = stock options and stock grant = grant?