Which of these problems does corporate finance deal with?
Check all that apply:
- How to finance long-term investments
- How much to pay employees
- How to manage short-term finances
- Which long-term investments to make
Which are advantages of focusing on shareholder wealth maximization as the goal of financial management?
Check all that apply:
- It takes into account both short-term and long-term effects and expectations.
- It can be measured objectively.
- It's an unambiguous goal.
- It avoids conflicts with other goals.
The best way to maximize shareholders' (or owners') wealth is to:
- Maximize profits by paying the lowest wages possible
- Maximize profits by charging high prices and reducing the quality of the product
- Ignore environmental effects where the rules are unclear
- Work within the confines of the law and ethical conventions
- Take ethical shortcuts as long as the behavior is not illegal
The executive board comprises the top managers of a company: CEO, CFO, COO, CMO, etc.
Which statements are true?
Check all that apply:
- The board of directors has a fiduciary duty to shareholders.
- The board of directors appoints and monitors the executive board.
- Shareholders supervise the executive board.
- Shareholders elect the board of directors.
Which statements are true?
Check all that apply:
- Normally, each share of stock has one vote.
- Corporations have to hold regular elections for the board of directors.
- Shareholders can transfer their right to vote to someone else.
- Shareholders must vote in person at the annual meeting.
The problems stemming from a conflict of interest between shareholders and executives are called agency problems.
- Opportunity
- Incompatibility
- Coordination
- Agency