Which of the Following Is Not Considered a Motive to Manage

question 5

Multiple Choice

Which of the following is not considered a motive to manage earnings?

• A) To create optimal manager compensation payments
• B) To create optimal job security for senior management
• C) To create optimal measures of assets and liabilities for balance sheet purposes
• D) To manage reported earnings in order to reduce industry-specific actions

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Definitions:

Lower Bound

The minimum value that a theoretical price, such as an option's price, can reach.

Call Option

A contractual agreement that allows the buyer the choice, without any requirement, to purchase an asset at an agreed-upon price within a set period.

Stock Price

The current trading price of a company's shares on the stock market, reflecting the market's valuation of the company at a particular time.

Warrants

These are financial derivatives that give the holder the right, but not the obligation, to buy or sell a stock at a predetermined price before a specific date.