At Hottie Potatee,the Famous Potato Bar Chain,the CEO,CFO,and COO Are

question 70

Multiple Choice

At Hottie Potatee,the famous potato bar chain,the CEO,CFO,and COO are each paid a salary and stock options.As with other large,publicly traded companies,the strategy behind structuring executive compensation packages in this way is:

• A)Stock options are paid out of after tax earnings.The company has already paid taxes on these earnings.
• B)The practice keeps executives from earning more than 20 times the pay of the average company employee.
• C)It conveniently eliminates golden parachutes and other incentives.
• D)It becomes an incentive because when profits go up,stock prices usually go up.

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Definitions:

Positively Skewed Distribution

A distribution where more values fall to the left side of the mean, causing a long tail on the right, indicating that the median is less than the mean.

Sample Mean

The average value calculated from a sample of data, used as an estimate of the population mean.

Normally Distributed

Describes a distribution that follows a normal curve or bell curve, where most observations cluster around the central peak and the probabilities for values further away from the mean taper off equally in both directions.

Sampling Distribution

The distribution pattern of probabilities for a specified statistic obtained from a random sample.