Which of the Following Statements Is False

question 17

Multiple Choice

Which of the following statements is false?

• A) The substantial use of stock and option grants in the 1990s greatly increased managers' pay-for-performance sensitivity.
• B) The optimal level of sensitivity of managers' compensation to the performance of their firms depends on the managers' level of risk aversion, which is hard to measure.
• C) While decreasing managers' risk exposure, increasing the sensitivity of managerial pay and wealth to firm performance does have some negative effects.
• D) In the absence of monitoring, the other way the conflict of interest between managers and owners can be mitigated is by closely aligning their interests through the managers' compensation policy.

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Definitions:

Product Quantity

The total number of units of a product that are produced, available for sale, or sold at a given time.

Factory

A building or set of buildings where goods are manufactured or assembled chiefly by machine.

Process Cost Accounting

An accounting method that accumulates costs for each process or department within a manufacturing environment.

Departments

Distinct units or divisions within a company or organization, each responsible for specific areas of operation or tasks.