676 words - 3 pages

Question 1 3 out of 3 points

To reduce Agency Problems, executive compensation should be designed to:

Correct Answer: create incentives so that managers act like owners of the firm.

Question 2 3 out of 3 points

In the shareholder wealth maximization model, the value of a firm's stock is equal to the present value of all expected future ____ discounted at the stockholders' required rate of return.

Correct Answer: profits (cash flows)

Question 3 3 out of 3 points

The primary objective of a for-profit firm is to ___________.

Correct Answer: maximize shareholder value

Question 4 0 out of 3 points

The Saturn Corporation (once a division of GM) was ...view middle of the document...

Correct Answer: Decrease the required rate of return (ke).

Question 10 3 out of 3 points

Economic profit is defined as the difference between revenue and ____.

Correct Answer: total economic cost

Question 11 0 out of 3 points

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Correct Answer: 15.87%

Question 12 3 out of 3 points

The ____ is the ratio of ____ to the ____.

Correct Answer: coefficient of variation; standard deviation; expected value

Question 13 3 out of 3 points

The closest example of a risk-free security is

Correct Answer: U.S. Government Treasury bills

Question 14 0 out of 3 points

Generally, investors expect that projects with high expected net present values also will be projects with

Correct Answer: high risk

Question 15 3 out of 3 points

A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.

Correct Answer: marginal costs

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