Managers Who Receive Stock Options in Their Firms as Part

question 20

Multiple Choice

Managers who receive stock options in their firms as part of their compensation may be most interested in:

• A)level income in their firms because level income is an indication of stability and stability leads to higher stock prices.
• B)income volatility in their firms because income volatility can lead to stock price volatility which can allow the exercise of stock options at times advantageous to the managers.
• C)increasing income in their firms because increasing income leads to higher stock prices and an increasing value of their investment in the firm.
• D)decreasing income in their firms because decreasing income leads to lower stock prices which gives the holders of stock options an opportunity to exercise those options at advantageous stock price levels.

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Definitions:

Measures

Quantitative or qualitative criteria used for assessing, comparing, or tracking performance or progress.

Moral Absolutism

The ethical belief that there are absolute, universal moral principles that apply to everyone, regardless of context or situation.

Ticking Bomb Scenario

A hypothetical situation used in ethical discussions about the use of torture or extreme measures to prevent an imminent catastrophe.

Counterargument

An argument or set of reasons put forward to oppose an idea or theory developed in another argument.