Share Option Schemes Go Wrong When

question 14

Multiple Choice

Share option schemes go wrong when

• A)bad senior managers manipulate reported profits.
• B)customers and suppliers cut out the firm and deal with each other directly.
• C)employees sue the government.
• D)Employees become customers.

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Definitions:

Risk-Free Rate

The return on investment with zero risk, typically represented by yields on government securities.

Beta

A measure of a stock's volatility in relation to the overall market; a beta greater than 1 indicates the stock is more volatile than the market.

Unsystematic Risk

The type of risk that is specific to a company or industry, which can be minimized through diversification.

Economic Slowdown

A period of reduced economic activity characterized by lower GDP growth, decreased consumer spending, and higher unemployment rates.