Which of the Following Statements Concerning Stock-Based Compensation Schemes for Executives

question 72

Multiple Choice

Which of the following statements concerning stock-based compensation schemes for executives is incorrect?

• A) They are the most objective and unambiguous way to compensate executives.
• B) They can align the interests of management and stockholders.
• C) They can dilute the equity of stockholders.
• D) The option strike price is typically the price that the stock was trading at when the option was granted.
• E) None of these choices are correct.

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Definitions:

Unconditioned Stimulus

A stimulus that naturally and automatically triggers a response without any learning needed.

Pavlovian Conditioning

A learning process that involves associating a previously neutral stimulus with an unconditioned stimulus to elicit a conditioned response similar to the unconditioned response.

Conditioned Stimulus (CS)

A previously neutral stimulus that, after being repeatedly presented prior to an unconditioned stimulus, elicits a conditioned response.

Unconditioned Stimulus (UCS)

A stimulus that elicits a reaction automatically, without any pre-existing learning required.