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Basic Question 2 of 2
Assume that a manager has been awarded an executive stock option that allows her to purchase 1,000 shares of the company's stock at a price of $10 per share. The current price of the company's stock is $8.25 per share. This executive stock option helps reduce the agency problem because:
B. the manager has an incentive to take actions that will decrease the company's stock price and make her option more valuable.
C. the manager has an incentive to take actions that will decrease the company's stock price even though these actions will make her option less valuable.
A. the manager has an incentive to take actions that will increase the company's stock price and make her option more valuable.
B. the manager has an incentive to take actions that will decrease the company's stock price and make her option more valuable.
C. the manager has an incentive to take actions that will decrease the company's stock price even though these actions will make her option less valuable.
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I passed! I did not get a chance to tell you before the exam - but your site was excellent. I will definitely take it next year for Level II.
Tamara Schultz
Learning Outcome Statements
describe key features of corporate issuers
CFA® 2025 Level I Curriculum, Volume 2, Module 1.