Executive Compensation Often Comprises Stock Options

question 13

Multiple Choice

Executive compensation often comprises stock options.These options have vesting periods,and may not be exercised for a while.Which of the following actions could help executives mitigate the risk of their stock option grants?

• A)Short call options on a broad market index.
• B)Short call options on a competitor's stock that is highly correlated with the company's own stock.
• C)Short futures on a broad market index.
• D)All of the above.

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Definitions:

Upper-Level Management

Executives and senior directors who are responsible for setting policies, strategies, and overall direction of a company or organization.

Old-School Technologies

Technologies or methods that were commonly used in the past but are now considered outdated or less efficient compared to modern alternatives.

New Technologies

Recent developments and innovations in technology that have not been widely adopted or are still in the experimental phase.

Tech-Savvy

Being knowledgeable about and proficient with modern technology, digital devices, and software.