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of <h1>Fair Value of Stock Options Set at Grant Date, Based on Black-Scholes Model, Not Adjusted for Future Changes.</h1> The fair value of a stock option under the SEBI Employee Stock Option Scheme and Employee Stock Purchase Scheme is determined through an arm's length transaction between a willing buyer and seller. It is calculated using an option-pricing model like Black-Scholes, considering factors such as exercise price, expected life, market price, volatility, dividends, and risk-free interest rate. The fair value is fixed at the grant date and not adjusted for subsequent changes. For options priced in Indian Rupees, the risk-free rate is based on government securities. Expected life and volatility estimates can use historical data or comparable peer group data. Significant assumptions and any changes must be justified.
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