Top Management Can Preserve the Autonomy of Division Managers and Encourage

question 144

Multiple Choice

Top management can preserve the autonomy of division managers and encourage an optimal level of internal transactions by

• A)selecting performance evaluation measures that are consistent with the achievement of overall corporate goals.
• B)selecting division managers who are most concerned about their individual performance.
• C)prescribing transfer prices between segments.
• D)setting up all organizational units as revenue centers.

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Definitions:

Gamma

A measure of the rate of change in an option's delta for a one-unit change in the price of the underlying asset, indicating the convexity of an option's value relative to the underlying.

Theta

A term from options trading that describes the rate of change in an option's price with respect to the passage of time.

Elasticity

A measure of how much the demand or supply of a product changes in response to changes in price or other economic factors.

Dividend Payout

The portion of a company's earnings that is distributed to shareholders in the form of dividends, usually expressed as a percentage of the earnings.