It Is True That Incentives Matter, And

question 215

Multiple Choice

It is true that incentives matter, and:

• A) getting incentives right is not a major issue.
• B) the right incentives can be hard to figure out.
• C) the ideal would be to remove all incentives.
• D) using wrong incentives is better than no incentives.

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Definitions:

Indirect Method

A type of cash flow reporting in financial statements where net income is adjusted for changes in balance sheet accounts to calculate the cash flow from operating activities.

Financing Activities

Transactions that result in changes in the size and composition of the equity and borrowings of an entity, such as issuing stock or obtaining loans.

Mortgage Notes Payable

A form of long-term debt where the borrower agrees to pay back a loan used to purchase real estate, along with interest, over a specified period.

Financing Activity

Financial transactions and events that affect the equity and debt structure of a company, including borrowing, repaying debt, and issuing or buying back shares.