GCC Corporation Is Planning to Issue Options to Its Key

question 26

Multiple Choice

GCC Corporation is planning to issue options to its key employees, and it is now discussing the terms to be set on those options. Which of the following actions would decrease the value of the options, other things held constant?

• A) GCC's stock price suddenly increases.
• B) The exercise price of the option is increased.
• C) The life of the option is increased, i.e., the time until it expires is lengthened.
• D) The Federal Reserve takes actions that increase the risk-free rate.
• E) GCC's stock price becomes more risky (higher variance).

Evaluate the impact of relationship fears and expectations on partner selection and relationship satisfaction.

Distinguish between communal and exchange relationships and their implications for relationship satisfaction.

Understand horizontal and vertical analysis of financial statements.

Calculate and interpret various types of financial ratios including liquidity, solvency, and profitability ratios.

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Definitions:

New Deal

A series of programs, public work projects, financial reforms, and regulations enacted by President Franklin D. Roosevelt in the 1930s to help the United States recover from the Great Depression.

Welfare State

A social system in which the government assumes primary responsibility for the welfare of its citizens by providing services such as healthcare, education, and financial support.

Public Works Administration

A New Deal agency in the United States (1933-1944) created to provide public infrastructure jobs in the wake of the Great Depression.

Filipino Repatriation Act

Legislation passed in the United States in 1935, encouraging Filipinos living in the U.S. to return to the Philippines by offering free transportation.