All of the Following Statements Regarding the Backdating of Stock

question 9

Multiple Choice

All of the following statements regarding the backdating of stock options is accurate EXCEPT:

• A) This practice ensures that the recipient automatically realizes a profit.
• B) It takes away from the purpose of stock options, which is to incent future performance.
• C) Company performance does not have to improve in order for the stockholder to make a profit.
• D) The date when the stock option was priced higher is to be considered the date of the award.
• E) It does not motivate executives to perform well because they are guaranteed a profit.

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Definitions:

Debt

An obligation owed by one party to another, typically involving borrowed money that must be repaid with interest.

Court

The judicial institution with the authority to adjudicate legal disputes and administer justice.

Bankruptcy Laws

The body of laws that governs the process and proceedings for legally declaring the inability of an individual or company to pay back their debts.

Goals

The desired results or outcomes that an individual or organization aims to achieve through planned actions.