Question 1

In regard to the agency problem,________ are the principal owners of a corporation.

Accepted Answer

A) shareholders 
B) managers 
C) employees 
D) suppliers 
A) shareholders 
B) managers 
C) employees 
D) suppliers

Question 2

For the risk-return principle implies that the more risky a given course of action,the higher the expected return must be.

Accepted Answer

A) True 
 B)False

Question 3

Serious ethical violations by corporations including Enron led the United States to pass

Accepted Answer

A) the Corporate Law Economic Reform Program. 
B) the Audit Reform and Corporate Disclosure Act. 
C) the Sarbanes-Oxley Act. 
D) all of the above. 
A) the Corporate Law Economic Reform Program. 
B) the Audit Reform and Corporate Disclosure Act. 
C) the Sarbanes-Oxley Act. 
D) all of the above.

Question 4

Capital structure refers to the financing of long-term investments.

Accepted Answer

A) True 
 B)False

Question 5

Which of the following is most likely to motivate executives to maximise shareholder wealth?

Accepted Answer

A) Tying bonuses to cost reductions and meeting budget goals 
B) Offering them relatively high salaries 
C) Tying annual bonuses to increases in annual profits 
D) Compensating them with stock options that can only be exercised after five years 
A) Tying bonuses to cost reductions and meeting budget goals 
B) Offering them relatively high salaries 
C) Tying annual bonuses to increases in annual profits 
D) Compensating them with stock options that can only be exercised after five years

Question 6

What does the agency problem refer to?

Accepted Answer

A) the conflictsbetween the board of directors and the employees of the firm 
B) the problems between financial managers and Internal Revenue agents 
C) the problems between stockbrokers and investors 
D) the conflicts of interest between the business managers and the stockholders 
A) the conflictsbetween the board of directors and the employees of the firm 
B) the problems between financial managers and Internal Revenue agents 
C) the problems between stockbrokers and investors 
D) the conflicts of interest between the business managers and the stockholders

Question 7

Profit maximisation does not adequately describe the goal of the firm because

Accepted Answer

A) profit maximisation does not require the consideration of risk. 
B) profit maximisation ignores the timing of a project's return. 
C) maximisation of dividend payout ratio is a better description of the goal of the firm. 
D) A and B. 
A) profit maximisation does not require the consideration of risk. 
B) profit maximisation ignores the timing of a project's return. 
C) maximisation of dividend payout ratio is a better description of the goal of the firm. 
D) A and B.

In regard to the agency problem,________ are the principal owners of a corporation.

For the risk-return principle implies that the more risky a given course of action,the higher the expected return must be.

Serious ethical violations by corporations including Enron led the United States to pass

Capital structure refers to the financing of long-term investments.

Which of the following is most likely to motivate executives to maximise shareholder wealth?

What does the agency problem refer to?

Profit maximisation does not adequately describe the goal of the firm because

Firms and the Financial Market

Understanding Financial Statements,taxes and Cash Flows

Financial Analysis - Sizing up Firm Performance

Time Value of Money - the Basics

The Time Value of Money - Annuities and Other Topics

An Introduction to Risk and Return - History of Financial Market Returns

Risk and Return - Capital Market Theory

Debt Valuation and Interest Rates

Share Valuation

Investment Decision Criteria

Analysing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters

Exam 1: Getting Started-Principles of Finance

In regard to the agency problem,________ are the principal owners of a corporation.

For the risk-return principle implies that the more risky a given course of action,the higher the expected return must be.

Serious ethical violations by corporations including Enron led the United States to pass

Capital structure refers to the financing of long-term investments.

Which of the following is most likely to motivate executives to maximise shareholder wealth?

What does the agency problem refer to?

Profit maximisation does not adequately describe the goal of the firm because

Firms and the Financial Market

Understanding Financial Statements,taxes and Cash Flows

Financial Analysis - Sizing up Firm Performance

Time Value of Money - the Basics

The Time Value of Money - Annuities and Other Topics

An Introduction to Risk and Return - History of Financial Market Returns

Risk and Return - Capital Market Theory

Debt Valuation and Interest Rates

Share Valuation

Investment Decision Criteria

Analysing Project Cash Flows

Risk Analysis and Project Evaluation

The Cost of Capital

Capital Structure Policy

Dividend Policy

Financial Forecasting and Planning

Working Capital Management

International Business Finance

Corporate Risk Management

Filters