All of the Following Is True About Phantom Stocks Except

question 1

Multiple Choice

All of the following is true about phantom stocks except:

• A)They are expensed over the vesting period
• B)They give employees the right to own equity
• C)The company needs cash when phantom stocks are exercised
• D)They grant the holders additional voting power
• E)They lower the dilution effect

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Definitions:

Capital Expenditures

Capital expenditures are funds used by a company to acquire, upgrade, and maintain physical assets such as property, industrial buildings, or equipment.

Cash Dividends

Payments made by a corporation to its shareholder members. It is the share of profits distributed in cash.

Borrower's Creditworthiness

An assessment of a borrower's ability to repay their debts on time, often considered by lenders before issuing a loan.

Commercial Lending

The practice of lending money to businesses for various purposes such as operations, expansion, or capital equipment purchases.