Which of the Following Statements Concerning Stock-Based Compensation Schemes for Executives

question 43

Multiple Choice

Which of the following statements concerning stock-based compensation schemes for executives is NOT true?

• A) Under accounting regulations that were enforced until 2005, stock options, like wages and salaries, were expensed.
• B) Huge stock-option grants can align the interests of management and stockholders.
• C) Stock-based compensation schemes can dilute the equity of stockholders.
• D) Huge stock-option grants increase the outstanding number of shares in a company.
• E) Top managers can earn huge bonuses from stock options that were granted several years prior.

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Definitions:

Milgram Experiment

A psychological experiment conducted by Stanley Milgram in the 1960s to study obedience to authority, where participants were instructed to administer electric shocks to another person.

Stanford University Prison Experiment

A psychological study conducted by Philip Zimbardo in 1971 at Stanford University, where students were assigned roles of prisoners and guards to explore the effects of perceived power.

Generalization

Drawing a conclusion about a certain characteristic of a population based on a sample from it.

Logical Support

The provision of reasons or evidence to justify a claim or argument.