The Most Likely Effect of Reducing Performance-Based Rewards for the CEOs

question 55

Multiple Choice

The most likely effect of reducing performance-based rewards for the CEOs of corporations would be:

• A) an increase in profits.
• B) a drop in revenues.
• C) a drop in profits.
• D) an increase in the value of the corporation.

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Definitions:

Par Common Stock

The face value of common stock as designated in the corporate charter, which is the minimum amount that shares can be issued for.

Total Dividend

The sum of all dividends paid out to shareholders for a specific period, representing the share of profits distributed.

Reacquired Shares

Shares that were previously issued and have been bought back by the issuing company, reducing the amount of outstanding stock on the open market.

Common Stock

A type of security that represents ownership in a corporation, with holders possibly entitled to dividends and voting rights.