Committee. At the time of the Amerin merger in 1999, the number as approved by the Company’s Stock Option and Compensation of options outstanding from the prior Amerin plan was added  to the total number of shares subject to stock options and other forms of equity compensation. In February 2001, as a result of the Financial Guaranty acquisition, 1,320,079 options (pre-split) to purchase shares of the Company’s common stock were issued to holders of options to purchase shares of Financial Guaranty common stock. The Company intends to issue any additional options to purchase shares of the Company’s common stock only from  under the Radian Group Inc. 1995 Equity Compensation Plan. Effective with the stock split in June 2001, all share totals within the plans were doubled. Information with regard to the Company’s stock option plans is as follows: The Company applies APB 25 in accounting for its stock- based compensation plans. Had compensation cost for the  Company’s stock option plans been determined based upon the fair value at the grant date for awards under these plans consistent with the methodology prescribed under SFAS 123, the Company’s net income and earnings per share would have been reduced by approximately $6,783,000 ($.07 per share), $4,189,000 ($.05 per share), and $2,932,000 ($.04 per share) in 2001, 2000, and 1999, respectively. The pro forma effect on net income for 2001, 2000 and 1999 is not representative of the pro forma effect on net income in future years because it does not take into consideration pro forma compensation expense related to grants made prior to 1995. The weighted average fair values of the stock options granted during 2001, 2000 and 1999 were $15.74, $11.98, and $10.32, respectively. The fair value of each stock option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following weighted average assumptions used for grants: The following table summarizes information  concerning currently outstanding and exercisable options at December 31, 2001: > 33 The Company has an Employee Stock Purchase Plan  (the “ESPP”). A total of 200,000 shares of the Company’s authorized but unissued common stock has been made available under the ESPP. The ESPP allows eligible employees to purchase shares of the Company’s stock at a discount of 15% of the beginning-of-period or end-of-period (each period being the first and second six calendar months) fair market value  of the stock, whichever is lower. Eligibility under the ESPP is determined based on standard weekly work hours and tenure with the Company, and eligible employees are limited to a maximum contribution of $400 per payroll period toward the purchase of the Company’s stock. Under the ESPP, the Company sold 7,528, 5,200 and 5,800 shares to employees in 2001,  2000 and 1999, respectively. The Company applies APB 25 in accounting for the ESPP. The pro forma effect on the Company’s net income and earnings per share had compensation cost been determined under SFAS 123 was deemed immaterial  in 2001, 2000 and 1999. The Company’s option plans include a “reload” feature. The award of a “reload” option allows the optionee to receive the grant of an additional stock option, at the then current market price, in the event that such optionee exercises all or part of an option (an “original option”) by surrendering already owned shares of common stock in full or partial payment of the option price under such original option. The exercise of an additional option issued in accordance with the “reload” feature will reduce the total number of shares eligible for award under the stock option plan.  Weighted  Average Exercise Number of Price Per Shares Share Outstanding, January 1, 1999 4,613,720 $13.33  Granted 459,842 20.32  Exercised (891,116) 13.20  Cancelled  (269,558) 19.26 Outstanding, December 31, 1999 3,912,888 13.77  Granted 920,214 22.67  Exercised  (1,177,356) 12.43  Cancelled  (143,980) 22.00 Outstanding, December 31, 2000 3,511,766 16.22  Granted  1,822,006 31.91  Options granted re:  Financial Guaranty acquisition 2,640,158 38.61  Exercised (1,351,468) 19.23  Cancelled (754,871) 49.88 Outstanding, December 31, 2001 5,867,591 26.19 Exercisable, December 31, 1999 2,782,292 11.09 Exercisable, December 31, 2000 1,974,334 11.98 Exercisable, December 31, 2001 3,175,377 25.06  Available for grant, December 31, 2001 2,587,674 2001 2000 1999 Expected life (years) 7.53 7.07 7.89  Risk-free interest rate 4.40% 6.69% 4.91%  Volatility 39.09% 39.29% 38.73%  Dividend yield 0.22% 0.16% 0.30% Options Outstanding  Options Exercisable  Weighted  Average Remaining Weighted Weighted  Contrac- Average Average  Range of Number tual Life Exercise Number Exercise  Exercise Prices Outstanding (Years) Price Exercisable Price  $ 4.50–$ 4.97 175,588 .89 $ 4.50 175,588 $ 4.50  $ 6.28–$ 7.34 413,300 2.36 7.26 413,300 7.26  $11.06–$16.25 396,406 4.39 13.39 345,531 12.97  $16.64–$24.00 1,747,592 5.69 20.81 846,359 20.76  $26.47–$37.36 2,516,666 8.28 30.85 807,560 30.19  $38.00–$56.68 482,127 7.55 44.82 451,127 45.21  $64.77–$68.18 135,912 6.08 65.80 135,912 65.80  5,867,591 3,175,377