Which of the Following Is True of the Effect of Management

question 14

Multiple Choice

Which of the following is true of the effect of management shareholdings on share prices?

• A)The top managers of regulated public companies have an incentive to hold a larger fraction of the firms they work for.
• B)Management incentive to hold shares is not related to risk aversion but to risk tolerance limit.
• C)Holding a large number of shares tells investors that the management is unsure about the firm's prospects and the management is waiting for the right opportunity to sell the shares.
• D)Management may obtain a better price for their shares if they commit to holding a larger fraction of the firm's outstanding shares.

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Definitions:

Gross Profit Percentage

A financial metric that represents the gross profit as a percentage of net sales, providing insight into the efficiency of a company's production and sales operations.

Selling Expenses

Costs associated with the selling of a property or product, including advertising, commissions, and legal fees, which may influence net profit or loss.

Related Party

Individuals or entities that are connected by relationships or other associations that might influence the financial transactions between them.

Loss Disallowed

A loss that cannot be deducted from taxable income due to tax rules or limitations.