Which of the Following Statements Is False

question 23

Multiple Choice

Which of the following statements is false?

• A) Backdating refers to the practice of choosing the grant date of a stock option retroactively, so that the date of the grant would coincide with a date when the stock price was at its low for the quarter or for the year.
• B) Unless it is reported in a timely manner to the IRS and to shareholders, and reflected in the firm's financial statements, backdating is illegal.
• C) The use of backdating suggests that some executive stock option compensation may not truly have been earned as the result of good future performance of the firm.
• D) By backdating the option the executive receives a stock option that is already out-of-the-money, with a strike price equal to the higher price on the supposed grant date.

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Definitions:

Price Increases

Price increases refer to the rise in the cost of goods and services, often resulting from factors like inflation, increased demand, or higher production costs.

Competitive

Relates to a market situation where various sellers vie to attract buyers by offering better conditions, prices, or qualities of goods and services.

Many Buyers

A market condition where numerous consumers are present, contributing to competition and demand for products.

Many Sellers

A characteristic of competitive markets where there are numerous suppliers offering similar or identical products, enhancing consumer choice.