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Question 1

4 out of 4 points

Various executive compensation plans have been employed to motivate managers to
make decisions that maximize shareholder wealth. These include:
Answer

Selected Answer:

requiring officers to own stock in the company
Correct Answer:

requiring officers to own stock in the company

Question 2
4 out of 4 points

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

total economic cost
Correct Answer:

total economic cost

Question 3
4 out of 4 points

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

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

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

Question 4
4 out of 4 points

Which of the following will increase (V0), the shareholder wealth maximization model
of the firm: V
0
(shares outstanding) =

t=1
(
t
) / (1+k
e
)
t
+ Real Option Value.
Answer

Selected Answer:

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

Decrease the required rate of return (ke).

Question 5
4 out of 4 points

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

maximize shareholder value
Correct Answer:


maximize shareholder value
Question 6
4 out of 4 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.
Answer

Selected Answer:

profits (cash flows)
Correct Answer:

profits (cash flows)

Question 7
4 out of 4 points

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

Selected Answer:

high risk
Correct Answer:

high risk

Question 8
4 out of 4 points

An closest example of a risk-free security is
Answer
Selected Answer:

U.S. Government Treasury bills
Correct Answer:

U.S. Government Treasury bills

Question 9
4 out of 4 points

The ____ is the ratio of ____ to the ____.
Answer
Selected Answer:

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

coefficient of variation; standard deviation; expected value

Question 10
4 out of 4 points

The primary difference(s) between the standard deviation and the coefficient of variation
as measures of risk are:
Answer

Selected
Answer:

the coefficient of variation is a measure of relative risk whereas the
standard deviation is a measure of absolute risk
Correct
Answer:

the coefficient of variation is a measure of relative risk whereas the
standard deviation is a measure of absolute risk

Question 11
4 out of 4 points

Based on risk-return tradeoffs observable in the financial marketplace, which of the
following securities would you expect to offer higher expected returns than corporate
bonds?
Answer

Selected Answer:

common stock
Correct Answer:

common stock

Question 12
4 out of 4 points

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

Selected Answer:

15.87%
Correct Answer:

15.87%

Question 13
0 out of 4 points

A price elasticity (E
D
) of 1.50 indicates that for a ____ increase in price, quantity
demanded will ____ by ____.
Answer

Selected Answer:

one unit; increase; 1.50 units
Correct Answer:

one percent; decrease; 1.50 percent

Question 14
4 out of 4 points

If demand were inelastic, then we should immediately:
Answer
Selected Answer:

raise the price.
Correct Answer:


raise the price.
Question 15
0 out of 4 points

Marginal revenue (MR) is ____ when total revenue is maximized.
Answer
Selected Answer:

equal to minus one
Correct Answer:

equal to zero

Question 16
4 out of 4 points

When demand is ____ a percentage change in ____ is exactly offset by the same
percentage change in ____ demanded, the net result being a constant total consumer
expenditure.
Answer

Selected Answer:

unit elastic; price; quantity
Correct Answer:

unit elastic; price; quantity

Question 17
4 out of 4 points

Those goods having a calculated income elasticity that is negative are called:
Answer
Selected Answer:

inferior goods
Correct Answer:

inferior goods

Question 18
4 out of 4 points

Iron ore is an example of a:
Answer
Selected Answer:

producers' good
Correct Answer:

producers' good

Question 19
4 out of 4 points

Songwriters and composers press music companies to lower the price for music
downloads because
Answer

Selected Answer:


songwriter royalties are a percentage of sales revenue
Correct Answer:

songwriter royalties are a percentage of sales revenue
Question 20
0 out of 4 points

The constant or intercept term in a statistical demand study represents the quantity
demanded when all independent variables are equal to:
Answer

Selected Answer:

1.0
Correct Answer:

0.0

Question 21
0 out of 4 points

The estimated slope coefficient (b) of the regression equation (Ln Y = a + b Ln X)
measures the ____ change in Y for a one ____ change in X.
Answer

Selected Answer:

unit, unit
Correct Answer:

percentage, percent

Question 22
0 out of 4 points

One commonly used test in checking for the presence of autocorrelation when working
with time series data is the ____.
Answer

Selected Answer:

t-test
Correct Answer:

Durbin-Watson test

Question 23
0 out of 4 points

The standard deviation of the error terms in an estimated regression equation is known
as:
Answer

Selected Answer:

Durbin-Watson statistic
Correct Answer:

standard error of the estimate

Question 24
0 out of 4 points

Even though insignificant explanatory variables can raise the adjusted R2 of a demand
function, one should not interpret their effects on the regression when
Answer

Selected Answer:

forecasting unit sales for operations planning
Correct Answer:

testing marketing hypotheses about the determinants of demand

Question 25
4 out of 4 points

In regression analysis, the existence of a significant pattern in successive values of the
error term constitutes:
Answer

Selected Answer:

autocorrelation
Correct Answer:

autocorrelation