Exam 1: An Overview of Managerial Finance

A hostile takeover involves an attempt by one group of stockholders to solicit votes from other stockholders in order to put a new management team into place and is usually motivated by low stock price.

Which of the following statements is correct?

Which of the following mechanisms is not used by shareholders to get managers to act in shareholder's best interests?

The corporate charter is a document filed with the secretary of the state in which the firm is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.

Which of the following statements is incorrect?

The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.

Which of the following should be the primary goal pursued by the financial manager of a firm?

Which of the following statements is correct?

Cultural differences do not impact the multinational corporations as they expand into different geographic regions.

Paying Payroll Service (PPS) recently declared bankruptcy.The price of PPS's stock has dropped from approximately $10 per share one year ago to $1 today.You can imagine that stockholders are not happy that the value of their stock has dropped so significantly.At the same time the financial position of the firm was deteriorating, PPS executives increased their salaries and perquisites substantially.Nothing they did violated any laws or was considered an unethical act.We would most likely describe this situation as .

No firm can take cost-increasing, socially responsible actions in a competitive marketplace and expect to continue to compete, even if those cost-increasing actions yield significant benefits to the firm.

In general, the role of the financial manager is to plan for the acquisition and use of funds so as to maximize the value of the firm.

Which of the following statements concerning a firm's quest to maximize wealth is correct?

All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest?

Which of the following statements concerning "agency problems" is most correct?

The 11 "titles" in the Sarbanes-Oxley Act of 2002 establish standards for accountability and responsibility of financial reporting information for major corporations.Which of the following activities does the act not provide rules that a corporation must abide by?

All of the following are external factors that influence the stock prices of the firm except

Having the manager's compensation tied to the company's performance increases the agency problem that corporations face.

Management may expropriate wealth from bondholders to shareholders through which of the following actions:

Exchange rate risk is the risk that the cash flows from a foreign project will be worth less than those same cash flows denominated in the parent company's home currency.