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:

Dissociation

A cognitive function leading to a disconnection in someone's thinking, recollection, and self-perception.

Depressant

A substance that reduces the functional or nervous activity of the body, often used to induce calm or sleep.

Alcohol

A psychoactive substance commonly found in beverages like beer, wine, and spirits, known for its effects on mood, cognition, and physical coordination.

THC

Tetrahydrocannabinol (THC) is the psychoactive compound found in cannabis plants that produces the "high" sensation.