Which of the Following Is NOT a Reason for the Recent

question 18

Multiple Choice

Which of the following is NOT a reason for the recent decline in the use of stock options in executive pay?

• A)There has been a growing pressure to expense stock options in annual reports.
• B)In a falling market, stock options are underwater-the market price is below the exercise price.
• C)Financial Accounting Standard Number 313 raises the cost of using stock options.
• D)Stock options do not pay for executive performance.

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Definitions:

Shut Down

A temporary choice made by a company to halt manufacturing because of unsuitable market circumstances.

Shutdown Point

The level of production and price at which the revenue of a firm covers its variable costs, below which the firm would cease operations.

Optimal Output

The level of production at which a firm achieves the highest possible profit, given its cost structure and the market price.

Short-Run

A period in which at least one factor of production is fixed, and firms can only adjust variable inputs.