Which of the Following Actions Would Be Likely to Encourage

question 37

Multiple Choice

Which of the following actions would be likely to encourage a firm's managers to make decisions that are in the best interests of shareholders?

• A) The percentage of executive compensation that comes in the form of cash is increased and the percentage coming from long-term stock options is reduced.
• B) The state legislature passes a law that makes it more difficult to successfully complete a hostile takeover.
• C) The percentage of the firm's stock that is held by institutional investors such as mutual funds,pension funds,and hedge funds rather than by small individual investors rises from 10% to 80%.
• D) The firm's founder,who is also president and chairman of the board,sells 90% of her shares.
• E) The firm's board of directors gives the firm's managers greater freedom to take whatever actions they think best without obtaining board approval.

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Definitions:

Gene

A sequence of DNA or RNA that codes for a molecule that has a function, acting as the basic unit of heredity in living organisms.

DNA Sequence

The order of nucleotides in a segment of DNA, determining genetic information and characteristics of living organisms.

RNA

Ribonucleic acid, a nucleic acid present in all living cells that plays a critical role in coding, decoding, regulation, and expression of genes.

Frameshift Mutations

Genetic mutations caused by insertions or deletions of a number of nucleotides in a DNA sequence that is not divisible by three, leading to a disruption of the reading frame during protein synthesis.