Which of the Following Statements Is True of Using Stock

question 2

Multiple Choice

Which of the following statements is true of using stock options as incentive pay?

• A) The use of stock options ensures that managers add value in terms of efficiency and customer satisfaction.
• B) Stock options require an option holder to purchase the organization's stocks at its present market rate.
• C) Stock options are rewarding for employees who exercise their option when the company's stock value has risen.
• D) Low-level employees with stock options are more likely to think like owners than executives who have stock options.
• E) A company's performance in the stock market tends to be significantly better if its low-level employees are provided stock options.

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Definitions:

Deseasonalized Time Series

A time series from which seasonal effects have been removed to analyze the underlying trend without seasonal variability.

Moving Averages

Moving averages are statistical measures used to analyze data points by creating a series of averages of different subsets of the full data set.

Mean Absolute Deviation

The average of the absolute differences of each data point from the data set's mean.

Smoothing Constant

A coefficient used in exponential smoothing to weight the relevance of historical data.