Which of the Following Is the Best Measure to Ensure

question 18

Multiple Choice

Which of the following is the best measure to ensure that management decisions are in the best interest of the stockholders?

• A) fire managers who are inefficient
• B) remove management's perquisites
• C) tie management compensation to the performance of the company's common stock price
• D) tie management compensation to the level of dividend per share

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Definitions:

Fixed Costs

Expenses that remain constant regardless of the amount of goods produced or sold, including lease payments, wage bills, and insurance fees.

Market Price

The existing rate at which an asset or service is offered for buying or selling.

Average Total Cost

The total cost of production divided by the quantity of output produced, representing the cost per unit of production.

Fixed Cost

Costs that do not change with the level of output or production, such as rent, salaries, and insurance.