Long-Term Incentive Components of Executive Compensation Plans Should Include Stock

question 67

Multiple Choice

Long-term incentive components of executive compensation plans should include stock options

• A)to enhance the short-term focus of executives.
• B)to mitigate the short-term focus of executives.
• C)to mitigate the long-term focus of executives.
• D)to encourage better performance by low-level staff.

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Definitions:

Risk-free Investment

An investment which is thought to have no risk of financial loss, though in reality, such an investment is virtually nonexistent.

Expected Rate of Return

The weighted average of all possible returns for an investment, accounting for the probability of each outcome.

Economic States

Various conditions describing the performance of an economy, such as growth, recession, or stability.

Arithmetic Average

The sum of values divided by the number of values, used for calculating the mean.