The Option to Buy a Company's Stock at Some Future

question 62

Multiple Choice

The option to buy a company's stock at some future time at current prices is often given to CEOs

• A) as an incentive to take actions that will raise the share price.
• B) because CEOs are often friends of those who hire them.
• C) as a means of discouraging the CEO from taking any risky actions.
• D) because this has become the custom of the business culture.

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Definitions:

Raise

The act of collecting or soliciting funds or resources, often for a business venture or project.

Due Diligence Period

A set timeframe during which detailed investigation and evaluation is conducted before entering into an agreement or transaction.

Initial Offer

Typically refers to the first sale of stock by a private company to the public, often associated with an initial public offering (IPO).

Investor

An individual or organization that puts money into financial schemes, shares, or property with the expectation of achieving a profit.