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:

Null Hypothesis

A statement in statistical hypothesis testing representing the assumption of no effect or no difference, serving as the default or baseline against which alternatives are tested.

Independent Variables

Variables in an experiment or model that are controlled or changed to test their effects on dependent variables.

Observed Values

The actual values that are measured or collected during an experiment or survey.

Predicted Values

In statistics, these are the estimated outcomes based on a regression model or other predictive model.