By rewarding executives with large option positions, corporations:
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.
E)None of the above.

Question

Quizplus · Accepted Answer

By rewarding executives with large option positions, corporations cause the executives to hold highly undiversified portfolios, which can be risky because they are overly concentrated in one stock.

By Rewarding Executives with Large Option Positions, Corporations