Which of the Following Statements Is FALSE

question 30

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:

Production Possibility Frontiers

A portrayal conveying the absolute production potential for two commodities, hinging on distinct inputs such as resources and supplementary factors.

International Trade

The exchange of goods and services across international borders or territories, influenced by comparative advantages, exchange rates, and international agreements.

Comparative Advantage

The ability of an individual or country to produce a good or service at a lower opportunity cost than another producer, supporting international trade.

Automobiles

Self-propelled vehicles designed primarily for passenger transportation.