Which of the Following Statements Is True in the Context

question 19

Multiple Choice

Which of the following statements is true in the context of stock-based compensation?

• A) Stock options usually result in information asymmetry.
• B) Stock-based compensation schemes for executives can align management and stockholder interests.
• C) A cause for concern is that stock options are often granted at extremely high strike prices.
• D) Critics deny that stock-based compensations motivate managers to improve company performance.
• E) Granting more stock options often results in an increase in stockholder equity.

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Definitions:

Journal Entry

A record in accounting that represents a transaction where at least two account balances are affected.

Cash Overage

A situation where the amount of cash on hand is greater than the expected amount, often due to errors in cash management or recording.

Internal Control System

A process implemented by management and other personnel to provide reasonable assurance regarding the achievement of objectives in effectiveness and efficiency of operations, reliability of financial reporting, and compliance with laws and regulations.

Purpose

The reason for which something is done or created, or for which something exists.