Executive Options Have a Number of Advantages, Including

question 19

Multiple Choice

Executive options have a number of advantages, including:

• A)Aligning shareholders interests to that of executives.
• B)Increasing executives' base pay.
• C)Increasing the volatility of executives' pay as a function of the performance of the firm.
• D)Both A and C are correct.
• E)None of the above.

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Definitions:

Fixed Cost

Expenses that do not vary with the level of output or sales, such as rent, salaries, or insurance premiums.

Variable Cost

Expenses that vary in proportion to the volume of goods or services produced in a business.

Opportunity Cost

The forfeiture of potential benefits from other options by selecting a specific one.

Fixed Costs

Business expenses that remain constant regardless of the level of production or sales activities, such as rent, salaries, and insurance.