Corporations by Rewarding Executives with Large Option Positions

question 9

Multiple Choice

Corporations by rewarding executives with large option positions:

• A) cause the executives to hold highly undiversified portfolios.
• B) put the firm in a risky position to pay off the options.
• C) cause the value of the stock to fall because the options are theft.
• D) are really valueless because most options are never exercised.

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Definitions:

Rotation

The act of an object or celestial body turning around its own axis, leading to day and night cycles on planets like Earth.

Columnar Joints

Natural rock formations that occur as vertical, hexagonal columns, typically found in basaltic lava flows.

Internal Strain

The deformation or stress within a material (such as rock or soil) due to external forces or changes in conditions like temperature or pressure.

Displacement

The movement of something from its place or position, often used in the context of geological features or populations.