for some statements on how financial managers can create value for their firms. Which of the following statement(s) is(are) FALSE? Select one or more alternatives: Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, social and governance. Capital markets are less efficient than goods markets; this is why the primary source of creating value is through clever financing decisions. If capital markets are inefficient at times, financial managers could create value through financing decisions. Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, sustainability and governance.

for some statements on how financial managers can create value for their firms. Which of the following statement(s) is(are) FALSE? Select one or more alternatives: Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, social and governance. Capital markets are less efficient than goods markets; this is why the primary source of creating value is through clever financing decisions. If capital markets are inefficient at times, financial managers could create value through financing decisions. Managers can create value for the firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, sustainability and governance.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter13: Sustainability Reporting

Section: Chapter Questions

Problem 11MC: Which of the following statements is most often the case? A. Socially responsible businesses tend to...

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See below for some statements on how financial managers can create value for their firms. Which of the following statement(s) is (are) TRUE? Select one or more alternatives: If capital markets are inefficient at times, financial managers could create value through financing decisions. Capital markets are less efficient than goods markets; this is why the primary source of creating value is through clever financing decisions. Managers can create value for a firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, social and governance. Managers can create value for a firm's stakeholders through improving its ESG performance. The "ESG" in ESG investing stands for environmental, sustainability and governance.
Many businesses finance their investment activities internally. Should internal financing affect the efficiency with which the interest rate performs its functions? No, investment is profitable if the expected rate of return is greater than the rate of interest regardless of the source of funds. Yes, investment is profitable if the expected rate of return is greater than the rate of interest regardless of the source of funds. O No, because internal financing relies on a different profit calculation. Yes, because firms are usually more anxious about what happens to money that they do not have to pay back.
Explain how you will apply in real life the following AXIOMS of FINANCIALMANAGEMENT AXIOM 1: RISK-RETURN TRADE OFFAXIOM 2: TIME VALUE OF MONEYAXIOM 3: CASH NOT PROFIT IS KINGAXIOM 4: INCREMENTAL CASH FLOWSAXIOM 5: EFFICIENT CAPITAL MARKETSAXIOM 6: THE CURSE OF COMPETITIVE MARKETSAXIOM 7: AGENCY PROBLEMAXIOM 8: TAXES BIAS BUSINESS DECISIONSAXIOM 9: ALL RISK IS NOT EQUALAXIOM 10: ETHICAL BEHAVIOR IS DOING THE RIGHT THING AND ETHICALDILEMMAS ARE EVERYWHERE IS FINANCE.
2. If the value of the financial sector is in terms of reducing the individual risk in the economy, how could you measure the value of the financial sector without using information on loan payments (broadly construed to include any interest payment necessary to measure an interest rate or any payment that looks like a return on an investmemt)? If we think of the amount of individual risk remaining after individuals buy portfolios is a measure of the ineffectiveness of the financial sector [or its imperfections], what do you think accounts for these imperfections?
Lower rates of interest means higher levels of loans, and therefore, higher level of investment in real capital equipment. With more capital we would expect an economy to be more productive and to have higher levels or real income and economic growth. Critically analyse this statement by connecting it with the financial intermediaries and how viral they are to a well-functioning financial system.
Which of the following statements regarding EVA is NOT CORRECT? Group of answer choices: EVA assumes that equity capital is not free. A firm’s EVA will increase if it achieves the same operating income with less investor-supplied capital. As long as a firm's ROIC is positive, its EVA will be positive. If a firm reports positive net income, its EVA will also be positive. Actions that increase reported net income may not always increase EVA.
In the case of a perfect capital market, according to Modigliani and Miller Proposition I and II, what is the optimal capitalstructure? When you introduce taxes, how can leverage alter the incentives of managers?
Several factors affect a firm’s need for external funds. Evaluate the effect of each following factor and place a check next to each factor that is likely to increase a firm’s need for external capital—that is, its AFN (additional funds needed). Check all that apply. The firm increases its dividend payout ratio. The firm switches its supplier for the majority of its raw materials. The new supplier offers less favorable credit terms and thus reduces the trade credit available to the firm, resulting in a reduction in accounts payable. The firm improves its production system and increases its profit margin. Accounts payable and accrued liabilities represent obligations that the firm must pay off. Assuming everything else holds constant, if they increase, the firm’s AFN will_________ .
Which of the following statements is CORRECT? a. One drawback of EVA as a performance measure is that it mistakenly assumes that equity capital is free. b. Actions that increase reported net income will always increase cash flow. c. One way to increase EVA is to achieve the same level of operating income but with more total invested capital obtained at a higher cost of capital. d. If a firm reports positive net income, its EVA must also be positive. e. One way to increase EVA is to generate the same level of operating income but with less total invested capital.
Which of the following actions should a manager take to optimize the firm's value? * Changing the capital structure if and only if the firm's value rises. Changing the capital structure if and only if the firm's value rises to the advantage of inside management Changing the capital structure if and only if the firm's value increases solely to the benefit of debtholders. Changing the capital structure if and only if the firm's value increases, even if it lowers stockholders' value. Changing the capital structure if and only if the firm's value grows and stockholder equity remains stable.
Discuss the concepts of adverse selection and moral hazard. Provide an example of each of these problems in financial markets and explain how these problems affect the financial structure and the rate of economic growth.
Which of the following statements is most often the case? A. Socially responsible businesses tend to post higher profits than those not focused on social responsibility. B. Companies that are not socially responsible will have better profits, but have a moral obligation to society. C. Socially responsible investing gives poorer returns than non-socially responsible Investing. D. Investors are more short termed focus and so socially responsible investing should not be a factor in their investment portfolio.