The Problem with Tying Executive Pay to Stock Prices Is

question 39

Multiple Choice

The problem with tying executive pay to stock prices is that:

• A) many factors other than executive effort and ability affect stock prices.
• B) executives can manipulate stock prices.
• C) stock price does not reflect firm performance.
• D) executives prefer more straightforward compensation schemes that reduce their risk.

Understand the concept of bond ratings and their relevance to investors.

Grasp the fundamentals of bond agreements and the implications of changes in interest rates on bond investments.

Understand the principles of JIT and their application for competitive advantage.

Recognize the concepts and terminologies associated with JIT systems.

---

Definitions:

Perfect Substitutes

Two goods that could be used in place of each other with no loss of utility to the consumer.

Perfect Complements

Goods that are always used together in fixed proportions, where the consumption of one good requires the consumption of a specific quantity of another good.

Indifference Curves

Graphs representing combinations of goods among which a consumer is indifferent, showing trade-offs in consumption preferences.

Marginal Utility

The extra pleasure or advantage obtained from using an additional unit of a product or service.