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:

Venipuncture

The process of puncturing a vein with a needle to draw blood or administer medication.

Buffy Coat

The layer between the packed red blood cells and plasma in a centrifuged blood sample; this layer contains the white blood cells and platelets.

Centrifuged

The process of using centrifugal force to separate substances of different densities or to remove moisture.

Venipuncture

A medical procedure that involves puncturing a vein with a needle to extract blood or administer medication.