1-Which of the following is NOT normally regarded as being a good reason to esta
ID: 2735399 • Letter: 1
Question
1-Which of the following is NOT normally regarded as being a good reason to establish an ESOP?
a.
To enable the firm to borrow at a below-market interest rate.
b.
To make it easier to grant stock options to employees.
c.
To help prevent a hostile takeover.
d.
To help retain valued employees.
e.
To increase worker productivity.
2-The CEO of D'Amico Motors has been granted some stock options that have provisions similar to most other executive stock options. If D'Amico's stock outperforms the market, these options will necessarily be worthless.
True
False
3- A reverse split reduces the number of shares outstanding.
True
False
4- If management wants to maximize its stock price, and if it believes that the dividend irrelevance theory is correct, then it must adhere to the residual distribution policy.
True
False
5- ESOPs were originally designed to help improve worker productivity, but today they are also used to help prevent hostile takeovers.
True
False
6- If investors prefer firms that retain most of their earnings, then a firm that wants to maximize its stock price should set a low payout ratio.
True
False
a.
To enable the firm to borrow at a below-market interest rate.
b.
To make it easier to grant stock options to employees.
c.
To help prevent a hostile takeover.
d.
To help retain valued employees.
e.
To increase worker productivity.
Explanation / Answer
Answer:-
1)-
b- To make it easier to grant stock options to employees.
2)-
False
3)-
True
4)-
False
5)-
True
6)-
True
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.