An Executive Pays No Taxes at the Time of Exercise

question 149

Multiple Choice

An executive pays no taxes at the time of exercise in a(an)

• A) stock appreciation rights plan.
• B) incentive stock option plan.
• C) nonqualified stock option plan.
• D) Taxes would be paid in all of these.

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Definitions:

Economies of Scale

Refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.

Diminishing Returns

A principle stating that if one factor of production is increased while other factors are held constant, the output per unit of the variable factor will eventually decrease.

Fixed Resources

Assets and inputs in production that remain constant regardless of the level of output.

Diseconomies of Scale

A condition in which a firm experiences an increase in average costs as it increases its output, due to factors such as inefficiencies or complexity.