S 4 Which of the following statements is TRUE?a. Agency problem involves the enrichment of the firm'sshareholders at the expense of the company's managers.O b.One major benefit of a corporation is that its earnings areexempt from double taxation.C.A compensation plan that includes a salary plus stockoptions maturing in phases over a period of time canmotivate the CEO to consistently maximize shareholderwealth.d.Owners of a limited liability company (LLC) or a limitedliability partnership (LLP) have unlimited personal liability forthe debts and actions of the company.

The statement which is true is , Option C A Compensation plan that includes a salary plus stock…

Answered: Which of the following statements is…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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What is the primary goal of financial management in a corporation?A. Maximizing sales revenueB. Minimizing expensesC. Maximizing shareholder wealthD. Maximizing employee satisfaction
‏.......theory would deduce that corporate growth causes an increase in shareholder remittance . Select one : a . Agency Theory b . Normative Accounting c . None of the other Points d . Positive Accounting
Which of the following statements is correct? Group of answer choices Corporations and partnerships have an advantage over proprietorships because a sole proprietor is subject to unlimited liability, but investors in the other types of businesses are not. Firms in highly competitive industries find it easier to exercise "social responsibility" than do firms in oligopolistic industries. A good goal for a corporate manager is maximization of expected EPS. A good example of an agency relationship is the one between stockholders and managers. Most business in the U.S. is conducted by corporations; corporations' popularity results primarily from their favorable tax treatment.
What is the commonly-cited objective of corporate managers in make decisions for a firm? Maximize the value of common shares outstanding. Maximize total revenue. Minimize total expenses. Minimize the risk of bankruptcy.
If a company’s board of directors wants management to maximize shareholder wealth, should the CEO’s compensation be set as a fixed dollar amount, or should the compensation depend on how well the firm performs? If it is to be based on performance, how should performance is measured? Would it be easier to measure performance by the growth rate in reported profits or the growth rate in the stock’s intrinsic value? Which would be the better performance measure? Why?
The following are some of the factors that influence the market price of a corporation: I. Industry prospects where the company operates II. Dividend declaration III. Management competency in terms of operating efficiency of the company IV. Profitability and good liquidity of the business Which of the above are external factors uncontrollable by the management? II and III None of the above II, III, and IV I and IV
Which one of the following statements is TRUE? a. Creditors have a claim on a firm's earning stream through the dividend payments they receive. b. One tool of corporate governance is a company's tax avoidance strategy. c. One tool of corporate governance is stock repurchases. d. One tool of corporate governance is how the company's charter affects the likelihood of a takeover. e. One tool of corporate governance is choosing a good investment banker.
Advantages of the corporate form of business, over other forms, include all of the following except: O Lower costs of separation of owners from managers, or so-called "agency costs." O Greater ease of raising capital. O Limited liability of the shareholders for corporate misdeeds. O Greater liquidity of ownership interests. O Greater ability to hire talented management.
The corporation is the most effective form of business organization because the corporation has: Select one: a) easier access to financial capital through selling bonds and stocks b) an unlimited liability toward the stock owners c) the problem of double taxation with respect to the corporate income d) a lot of skilled and semi-skilled labourers e) more freedom of action with respect to management
How the corporate governance is useful for a company? O a. It maximizes the mismanagement of the company. O b. It maximizes the capital inefficiency of the company. O cit maximizes the share prices of the company. O d. It maximizes the capital cost of the company.
The primary goal of financial managers include all of the following EXCEPT : A. Maximize stockholder wealth. B. Maximizing firm value C. Challenge legislation in states where the company operates D. Minimizing WACC
Which of the following are true statements on the principal-agent problem between corporate managers and shareholders: O Owners can ensure that the managers are actng as desired O Corporate governance will resolve the problem with certainty O There may be considerable leeway for owners to serve their own interests Managers usually have better information than owners This process is banned on the stock market There may be considerable leeway for managers to serve their own interests There is no other way for companies to raise money It relates to the business model

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