Which Statement Is True of Using Stock Options as Incentive

question 79

Multiple Choice

Which statement is true of using stock options as incentive pay?

• A) The use of stock options ensures that managers add value in terms of efficiency and customer satisfaction.
• B) Stock options require an option holder to purchase the organization's stocks at its present market rate.
• C) Stock options are rewarding for employees who exercise their option when the company's stock value has risen.
• D) Low-level employees with stock options are more likely to think like owners than executives who have stock options.
• E) A company's performance in the stock market tends to be significantly better if its low-level employees are provided stock options.

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Definitions:

Gross Wages

The total amount of money earned by an employee before any deductions or taxes are taken out.

Federal Withholding

The practice of an employer withholding income tax from an employee's paycheck and directly paying it to the government.

Social Security Tax

A mandatory contribution to the U.S. Social Security system, levied on both employers and employees, to fund retirement, disability, and survivorship benefits.

Medicare Tax

A federal tax paid by employees and employers to fund the Medicare program, which provides health insurance for individuals who are 65 years of age and over, or who meet other specific criteria.