Which of the Following Illustrates a Situation That Would Encourage

question 26

Multiple Choice

Which of the following illustrates a situation that would encourage a manager to work in the interests of a company's shareholders?

• A)The manager's salary depends largely on increasing quarterly accounting profits.
• B)The manager's salary depends largely on his/her ability to keep costs low.
• C)The manager's total compensation depends on maximizing the company's share price.
• D)The manager has access to many perks, which improves his/her personal work environment.

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Definitions:

Eurodollars

Deposits held in banks outside the US but denominated in US Dollars, not under jurisdiction of the Federal Reserve.

Actively Traded

Describes securities or assets that are frequently bought and sold, often indicating high liquidity and market interest.

Reversing Trade

The process of undoing or closing out a trading position, often used to correct an incorrect trade or take profits.

Long

A term used in investing to denote the purchase of a security with the expectation that the asset will rise in value.