Which of the Following Is NOT True

question 3

Multiple Choice

Which of the following is NOT true?

• A) Management has an incentive to issue executive stock options after bad news
• B) Management has an incentive to issue executive stock options before good news
• C) Executive stock options encourage management to pursue strategies that are best for the company in the long run
• D) Management have an incentive to time the announcement of good news just before they plan to exercise their stock options

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Definitions:

Probabilities

A statistical measure that quantifies the likelihood of one or more events happening.

Net Present Value

A financial metric used to evaluate the profitability of an investment, calculating the difference between the present value of cash inflows and the present value of cash outflows over time.

Future Cash Inflows

Projected incoming cash to a business from its operations, investments, or financing activities.

Rate of Return

The gain or loss on an investment over a specified period, expressed as a percentage of the investment’s cost.