Which of the Following Mechanisms Is Used to Motivate Managers

question 29

Multiple Choice

Which of the following mechanisms is used to motivate managers to act in the interests of shareholders?

• A) Bond covenants.
• B) The threat of a takeover.
• C) Executive stock options.
• D) Statements a and b are correct.
• E) Statements b and c are correct.

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Definitions:

Consumer Incomes

The total amount of money earned by consumers from various sources like wages, investments, and government benefits, which affects their purchasing power and economic behavior.

Normal Good

A good for which demand increases as the income of the consumer increases, all other factors being equal.

Substitutes

Products or services that can replace each other in use, where an increase in the price of one leads to an increase in demand for the other.

Complements

Goods that are often used together, where the increase in the consumption of one leads to an increase in the consumption of the other.