The Prevalence of Stock Options in Executive Pay Packages

question 91

Multiple Choice

The prevalence of stock options in executive pay packages

• A)eliminates managers' incentives to engage in short-term earnings management.
• B)is frowned upon by the SEC.
• C)may actually contribute to,rather than moderate,managers' short-term focus.
• D)has been widely cited as the main cause of the financial system meltdown that occurred in 2008.

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Definitions:

Pyroclastic Flows

High-density mixtures of hot volcanic ash, pumice, rock fragments, and volcanic gas that move away from the volcano at high speeds during an explosive eruption.

Mudflows

Rapid downhill movements of water-saturated earth material, primarily composed of mud and often triggered by heavy rainfall or volcanic activity.

Basaltic Lava

A type of molten rock that emerges from volcanoes or fissures on the Earth's surface, known for its low viscosity due to low silica content.

Catastrophic Melting

Rapid melting of ice or snow, often due to volcanic activity or sudden climate change, that can lead to significant water flow or flooding.