21. Which of the following is not a true statement regarding stock options? a. They may cause dilution of earnings per share b. The exercise of stock options could result in either gains or losses c. They involve a compensation expense d. Exercise improves the short-term liquidity and debt position of the issuing firm e. They generally allow the purchase of common stock at favorable terms 22. The pricelearnings ratio: a measures the past earning ability of the firm. b. measures the stability of earnings. c. relates price to dividends. d. relates price to total net income. e. indicate a firm's future growth. 23. Stable dividend policy would most commonly imply: a stable dividends per share. b. a stable dividend yield. c. stable total dividends declared. d. stable earnings per share. e increasing dividends per share. 24. A firm has a degree of financial leverage of 1.3. If earnings before interest and tax increase by 10%, then net income: a. will decrease by 13.0%. b. will increase by 13. c. will increase by 13.0%. d. will decrease by 13. e. none of the above