When Would Stock Options Offered to an Employee Be Ineffective

question 12

Multiple Choice

When would stock options offered to an employee be ineffective in reducing the principal-agent problem?

• A) When the link between worker effort and the share price of the firm is clear.
• B) When stock options form a large proportion of the worker's pay.
• C) When the share price of the firm is affected by external factors.
• D) When the worker is unable to influence the share price of the firm.

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Definitions:

Sensory Neurons

Nerve cells responsible for converting external stimuli from the organism's environment into internal electrical impulses.

Motor Neurons

Nerve cells responsible for conveying signals from the brain or spinal cord to muscles, causing them to contract and enable movement.

Nervous System

A complex framework of neurons and nerve fibers responsible for conveying signals throughout the body, integrating its movements and sensory inputs.

Inherited Traits

Characteristics or attributes passed down from parents to offspring through genes.