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:

Dishabituation

The restoration of a response that has undergone habituation, typically due to the presentation of a novel stimulus.

Neurotransmitter Release

The process by which neurotransmitters are secreted from neural synapses, facilitating communication between neurons.

Dishabituation

is the renewed response to a stimulus after habituation has occurred, typically due to a novel stimulus interrupting the habituation process.

B State

A concept in psychology that refers to an individual's internal state, such as mood or emotion, which can affect behavior and perception.