Which of the Following Statements About Stock-Based Managerial Compensation Is

question 30

Multiple Choice

Which of the following statements about stock-based managerial compensation is correct?

• A) It may cause dysfunctional behavior in the short-run as managers try to drive up the company's stock price.
• B) Exercising the option as soon as it is granted will leave the manager better off from a cash standpoint.
• C) Stock options are always guaranteed to increase in value over time.
• D) Managers always prefer to receive stock options instead of year-end bonuses.

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Definitions:

Eyewitness Accuracy

The reliability with which witnesses recall the details of events they've witnessed, often questioned due to various factors affecting memory.

Strongly Negative

A term describing an intensely adverse or unfavorable condition, emotion, or response.

Decay Theory

A theory that proposes memory fades due to the mere passage of time unless it is actively rehearsed.

Interference Theory

A theory that explains forgetting in the human memory as a result of conflicting information interfering with the retrieval of stored memories.