When Are the Interests of Stockholders and Senior Managers Likely

question 31

Multiple Choice

When are the interests of stockholders and senior managers likely to be most closely aligned?

• A) When the board of directors is dominated by insiders
• B) When managers receive most of their compensation in the form of a regular salary
• C) When stockholders are weak
• D) When managers receive most of their compensation in the form of stock options
• E) When corporate raiders are unable to mount a takeover bid

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Definitions:

Mechanics

The field of physics concerned with the movement of objects and the influences of forces on that movement.

Graph Function

A visual representation of the relationship between variables in mathematical equations, typically using an x-y coordinate system.

Profit Maximizing

A strategy or behavior where a firm determines the level of output that yields the highest possible profit, given market conditions and production costs.

Mechanics

The area of physics that explores how objects are moved and the impact of forces on their motion.