Which One of the Following Is Least Apt to Encourage

question 55

Multiple Choice

Which one of the following is least apt to encourage managers to act in the best interest of shareholders?

• A)Shareholder election of the board of directors,who in turn select managers
• B)Threat of a takeover by another firm
• C)Linking manager compensation to share value
• D)Compensating managers with fixed salaries
• E)Granting stock options to key managers

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Definitions:

Annual Dividend

Annual Dividend is the total amount of dividends that a company pays out to its shareholders over the course of a year.

Required Return

The expected yield that an investor demands for committing capital to an investment.

Required Return

The minimum return that investors expect from an investment considering the risk involved.