Question 1

CEO compensation is generally highest in

Accepted Answer

A) the United States. 
B) India. 
C) the UK. 
D) Germany. 
A) the United States. 
B) India. 
C) the UK. 
D) Germany.

Question 2

A firm has an average investment of $10,000 during the year.During the same period, the firm generates after-tax income of $1,000.If the cost of capital is 15 percent, what is the net return on the investment?

Accepted Answer

A) 15 percent 
B) -5 percent 
C) 10 percent 
D) 5 percent 
A) 15 percent 
B) -5 percent 
C) 10 percent 
D) 5 percent

Question 3

All else equal, one would expect to see more earnings management at privately held corporations than at publicly traded corporations.

Accepted Answer

A) True 
 B)False

Question 4

Define the term economic income.

Accepted Answer

Economic income is defined as

Question 5

Shareholders typically rely on independent auditors to monitor the performance of their managers.

Accepted Answer

A) True 
 B)False

Question 6

Which type of situation best represents "gambling for redemption"?

Accepted Answer

A) A manager decides to invest in a single new product instead of three different products. 
B) A firm risks its reputation on the introduction of a revolutionary product. 
C) The firm's treasurer invests all of its cash in a single money market mutual fund. 
D) A firm on the verge of bankruptcy invests all available funds in a high-risk, low-NPV project in order to attempt to save itself. 
A) A manager decides to invest in a single new product instead of three different products. 
B) A firm risks its reputation on the introduction of a revolutionary product. 
C) The firm's treasurer invests all of its cash in a single money market mutual fund. 
D) A firm on the verge of bankruptcy invests all available funds in a high-risk, low-NPV project in order to attempt to save itself.

Question 7

The following are advantages of using EVA as a performance measure except

Accepted Answer

A) EVA can substitute for explicit monitoring by top management. 
B) EVA makes the cost of capital visible to operating management, thereby reducing capital employed. 
C) EVA does not measure present values. 
D) EVA highlights business units that are underperforming their peers. 
A) EVA can substitute for explicit monitoring by top management. 
B) EVA makes the cost of capital visible to operating management, thereby reducing capital employed. 
C) EVA does not measure present values. 
D) EVA highlights business units that are underperforming their peers.

CEO compensation is generally highest in

A firm has an average investment of $10,000 during the year.During the same period, the firm generates after-tax income of $1,000.If the cost of capital is 15 percent, what is the net return on the investment?

All else equal, one would expect to see more earnings management at privately held corporations than at publicly traded corporations.

Define the term economic income.

Shareholders typically rely on independent auditors to monitor the performance of their managers.

Which type of situation best represents "gambling for redemption"?

The following are advantages of using EVA as a performance measure except

Introduction to Corporate Finance

How to Calculate Present Values

Valuing Bonds

The Value of Common Stocks

Net Present Value and Other Investment Criteria

Making Investment Decisions With the Net Present Value Rule

Introduction to Risk and Return

Portfolio Theory and the Capital Asset Pricing Model

Risk and the Cost of Capital

Project Analysis

Investment Strategy and Economic Rents

Efficient Markets and Behavioral Finance

An Overview of Corporate Financing

How Corporations Issue Securities

Payout Policy

Does Debt Policy Matter

How Much Should a Corporation Borrow

Financing and Valuation

Understanding Options

Valuing Options

Real Options

Credit Risk and the Value of Corporate Debt

The Many Different Kinds of Debt

Leasing

Managing Risk

Managing Risk

Financial Analysis

Financial Planning

Working Capital Management

Mergers

Corporate Restructuring

Governance and Corporate Control Around the World

Filters

Exam 12: Agency Problems Compensation and Performance Measurement

CEO compensation is generally highest in

A firm has an average investment of $10,000 during the year.During the same period, the firm generates after-tax income of $1,000.If the cost of capital is 15 percent, what is the net return on the investment?

All else equal, one would expect to see more earnings management at privately held corporations than at publicly traded corporations.

Define the term economic income.

Shareholders typically rely on independent auditors to monitor the performance of their managers.

Which type of situation best represents "gambling for redemption"?

The following are advantages of using EVA as a performance measure except

Introduction to Corporate Finance

How to Calculate Present Values

Valuing Bonds

The Value of Common Stocks

Net Present Value and Other Investment Criteria

Making Investment Decisions With the Net Present Value Rule

Introduction to Risk and Return

Portfolio Theory and the Capital Asset Pricing Model

Risk and the Cost of Capital

Project Analysis

Investment Strategy and Economic Rents

Efficient Markets and Behavioral Finance

An Overview of Corporate Financing

How Corporations Issue Securities

Payout Policy

Does Debt Policy Matter

How Much Should a Corporation Borrow

Financing and Valuation

Understanding Options

Valuing Options

Real Options

Credit Risk and the Value of Corporate Debt

The Many Different Kinds of Debt

Leasing

Managing Risk

Managing Risk

Financial Analysis

Financial Planning

Working Capital Management

Mergers

Corporate Restructuring

Governance and Corporate Control Around the World

Filters