By Rewarding Executives with Large Option Positions,corporations

question 10

Multiple Choice

By rewarding executives with large option positions,corporations:

• A) cause the executives to hold highly undiversified portfolios.
• B) put the firm in a risky position to pay off the options.
• C) cause the value of the stock to fall because the options are theft.
• D) are really valueless because most options are never exercised.
• E) None of these.

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Definitions:

Coefficient Of Determination

A statistic that indicates the proportion of the variance in the dependent variable that is predictable from the independent variable(s).

Dependent Variable

In an experimental setup, the variable being tested and measured, which is expected to change due to manipulations of the independent variable.

Independent Variable

A variable in an experiment or study that is manipulated or controlled by the researcher to observe its effect on the dependent variable.

Numerical Techniques

Computational algorithms used to solve mathematical problems, including equations, optimizations, and simulations.