Regarding the Stock Market, One Problem with Using Stock Options

question 9

Multiple Choice

Regarding the stock market, one problem with using stock options as incentives is:

• A)The transaction costs for CEOs to sell their options are relatively high.
• B)CEOs are only allowed to exercise their options when the stock price of the company is equal to the strike price.
• C)Executives only have partial influence on their firm's stock price.
• D)Typically, stock options expire after 2 years and therefore are short-term incentives.
• E)There are no problems with using stock options to incent executives.

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Definitions:

Big Five

Big Five is a model describing five broad personality traits—openness, conscientiousness, extraversion, agreeableness, and neuroticism—that are used to understand and categorize human personality.

Trait Dimensions

aspects or characteristics that can vary within individuals, used in psychology to describe and differentiate between personalities.

Lie Scale

A tool used in questionnaires and psychological tests that helps to identify when respondents are not answering truthfully by measuring the tendency to give socially desirable responses.

White Lie

A harmless or small lie told to avoid hurting someone's feelings or for benevolent reasons.