Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Question
Chapter 12, Problem 1PS
Summary Introduction
To discuss: Whether the given statements are true or false.
Expert Solution & Answer
Explanation of Solution
The false option is as follows:
Stock options offer managers the right (but not the obligation) to purchase their firm’s shares in the upcoming at a fixed price.
Hence, options (c) is false.
The true options is as follows:
The CEO from country U are paid much more than other countries CEOs.
Hence, options (a) is true.
The majority of the compensation fraction for country U’s CEOs arises from stock option grants.
Hence, options (b) is true.
Recently, country U’s accounting rules needs value of stock option grants as a recognition of compensation expense.
Hence, options (d) is true.
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Students have asked these similar questions
The government of a country is planning to offer tax refunds and tax incentives to the largest companies in the country. The government feels that this is needed to fuel
innovation and increase production.
Which of the following, if true, would weaken the argument for providing tax incentives to big companies?
O A Only small enterprises have shown net employment creation during the past five years.
O B. Large companies are the biggest contributors to the presidential elections in the country.
C. High corporate taxes are the reason for high product prices in this country.
OD. The market capitalization of the biggest companies listed in the stock market has gone up in recent times.
E. Research and development by large companies has been a key contributor to the country's development.
Which one of the following factors may affect stock return but out of the CEO's control?This chould potentially be a problem when trying up the compensation scheme to stock returns/
A.Supply chain risk management
B.Federal monetary policy and regulations
C.The rival firm recruits the company's employees
D.Tte high inflation rate announced in the last quater
Which of the following statements is CORRECT?
a. A good goal for a rm's management is maximization of expected EPS.
b. Most business in the U.S. is conducted by corporations, and corporations' popularity resultsprimarily from their favorable tax treatment.
c. Because most stock ownership is concentrated in the hands of a relatively small segment ofsociety, rms' actions to maximize their stock prices have little benet to society.
d. Corporations and partnerships have an advantage over proprietorships because a sole proprietoris exposed to unlimited liability, but the liability of all investors in the other types of businesses ismore limited.
e. The potential exists for agency conicts between stockholders and managers.
Please explain.
Chapter 12 Solutions
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Ch. 12 - Prob. 1PSCh. 12 - Terminology Define the following: a. Agency costs...Ch. 12 - Prob. 3PSCh. 12 - EVA Here are several questions about economic...Ch. 12 - Accounting measures of performance The Modern...Ch. 12 - Economic income Fill in the blanks: A projects...Ch. 12 - Prob. 7PSCh. 12 - Prob. 8PSCh. 12 - Prob. 9PSCh. 12 - Prob. 10PS
Ch. 12 - Management compensation We noted that management...Ch. 12 - Prob. 12PSCh. 12 - Prob. 13PSCh. 12 - Prob. 14PSCh. 12 - EVA Herbal Resources is a small but profitable...Ch. 12 - Prob. 16PSCh. 12 - Economic income Consider the following project:...Ch. 12 - EVA Use the Beyond the Page feature to access the...Ch. 12 - Accounting measures of performance Use the Beyond...Ch. 12 - EVA Ohio Building Products (OBP) is considering...
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