The Longer the Focus of Managerial Incentive Compensation, the Greater

question 142

Multiple Choice

The longer the focus of managerial incentive compensation, the greater the __________ top-level managers.

• A) earnings potential for
• B) risks borne by
• C) incentives for
• D) potential tax burden for

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Definitions:

Return On Assets

A measure of how effectively a company uses its assets to generate profit, calculated as net income divided by average total assets.

Total Assets

The sum of all current and non-current assets owned by a company, indicating the total resources available for use in operations.

Market To Book Ratio

A ratio used to compare a company's market value (market capitalization) to its book value, providing insight into how the market values the company's equity.

Book Value Per Share

The financial measure that indicates the per-share value of a company's equity available to shareholders, calculated by dividing net assets by the total number of outstanding shares.