Which of the Following Statements About Stock Options Is False

question 17

Multiple Choice

Which of the following statements about stock options is false?

• A)Stock options are intended to give upper management the same goals as stockholders.
• B)When stock options are exercised by upper management,existing stockholders lose voting power.
• C)Stock options may create an incentive for upper management to overstate net income.
• D)An expense is reported by the company when stock options are exercised.

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Definitions:

Consensus

General agreement among a group of people or within a community.

Consistency

The principle of maintaining uniformity or stability in one's beliefs, attitudes, and behaviors over time or across situations.

Kelley's Covariation Model

This model proposes that people attribute behavior to factors that covary most closely with, or appear to cause, that behavior, considering consensus, distinctiveness, and consistency information.

Consensus

A general agreement among a group of people or within a community, often reached after discussion and consideration of various perspectives.