Escolar Documentos
Profissional Documentos
Cultura Documentos
Answer: c
Diff: E
Firm organization
2.
Answer: c
Diff: E
Firm organization
3.
Answer: a
Diff: E
Chapter 1 - Page 1
Firm organization
4.
Answer: a
Diff: E
Until this year, Cheers Inc. was organized as a partnership. This year,
the partners have decided to organize the business as a corporation. As
a result of this change in organizational form, which of the following
statements is most correct?
a.
b.
c.
d.
Answer: c
Diff: E
Corporate form
6.
Answer: c
Corporations
Corporations
Corporations
Corporations
Statements c
Corporate form
7.
Diff: E
Answer: a
Diff: E
Chapter 1 - Page 2
Goal of firm
8.
Answer: d
Maximize
Maximize
Minimize
Maximize
Maximize
Agency
9.
Diff: E
Answer: d
Diff: E
Agency
10.
to
reduce
agency
Answer: a
Diff: E
conflicts
between
Answer: b
Diff: E
Chapter 1 - Page 3
Agency
12.
Answer: d
Diff: E
Which of the following actions are likely to reduce the agency problem
between stockholders and managers?
a. Congress passes a law that severely restricts hostile takeovers.
b. A manager receives a lower salary but receives additional shares of
the companys stock.
c. The board of directors has become more vigilant in its oversight of
the companys management.
d. Statements b and c are correct.
e. All of the statements above are correct.
Managerial incentives
13.
Diff: E
Bond covenants.
The threat of a takeover.
Pressure from the board of directors.
Statements a and b are correct.
Statements b and c are correct.
Managerial incentives
14.
Answer: e
Answer: e
Diff: E
Miscellaneous concepts
15.
Answer: c
Diff: E
Chapter 1 - Page 4
Miscellaneous concepts
16.
Answer: e
Diff: E
Miscellaneous concepts
17.
Answer: c
Diff: E
Miscellaneous concepts
18.
Answer: a
Diff: E
Miscellaneous concepts
19.
Answer: b
Diff: E
Chapter 1 - Page 5
Miscellaneous concepts
20.
Answer: e
Diff: E
Medium:
Business ethics
21.
Diff: M
Social welfare
22.
Answer: e
Answer: a
Diff: M
Chapter 1 - Page 6
Answer: b
Diff: M
Corporate form
24.
Answer: d
Diff: M
Partnership form
25.
Answer: d
Diff: M
Chapter 1 - Page 7
Firm organization
26.
Answer: c
Diff: M
Firm organization
27.
Answer: e
Diff: M
Answer: c
Diff: M
Chapter 1 - Page 8
Answer: e
Diff: M
Agency
30.
Answer: c
Diff: M
Chapter 1 - Page 9
Agency
31.
Answer: d
Diff: M
Miscellaneous concepts
32.
Answer: e
Diff: M
Chapter 1 - Page 10
CHAPTER 1
ANSWERS AND SOLUTIONS
1.
Firm organization
Answer: c
Diff: E
Firm organization
Answer: c
Diff: E
Firm organization
Answer: a
Diff: E
Firm organization
Answer: a
Diff: E
Except for statement a, all the other statements are exactly opposite for
corporations.
5.
Firm organization
Answer: c
Diff: E
Corporate form
Answer: c
Diff: E
Corporate form
Answer: a
Diff: E
Statement a is correct.
The other statements are false.
Limited
liability is an advantage of the corporate form, and it is generally
easier for corporations to raise capital as compared to partnerships or
proprietorships.
8.
Goal of firm
Answer: d
Diff: E
Chapter 1 - Page 11
9.
Agency
Answer: d
Diff: E
Agency
Answer: a
Diff: E
Agency
Answer: b
Diff: E
Agency
Answer: d
Diff: E
Managerial incentives
Answer: e
Diff: E
Managerial incentives
Answer: e
Diff: E
Miscellaneous concepts
Chapter 1 - Page 12
Answer: c
Diff: E
16.
Miscellaneous concepts
Answer: e
Diff: E
Miscellaneous concepts
Statement
conflict
Statement
Statement
18.
Answer: c
Diff: E
c is correct.
Statement a is false; bond covenants reduce
between stockholders (through managers) and bondholders.
b is false; a takeover usually increases a firms stock price.
c is true; therefore, the remaining statements are false.
Miscellaneous concepts
Answer: a
Diff: E
Miscellaneous concepts
Answer: b
Diff: E
Miscellaneous concepts
Answer: e
Diff: E
Chapter 1 - Page 13
21.
Business ethics
Answer: e
Diff: M
22.
Social welfare
Answer: a
Diff: M
23.
Answer: b
Diff: M
24.
Corporate form
Answer: d
Diff: M
25.
Partnership form
Answer: d
Diff: M
26.
Firm organization
Answer: c
Diff: M
27.
Firm organization
Answer: e
Diff: M
28.
Answer: c
Diff: M
29.
Answer: e
Diff: M
30.
Agency
Answer: c
Diff: M
Agency
Answer: d
Diff: M
Miscellaneous concepts
Answer: e
Diff: M
Statement e is correct.
The other statements are false.
Corporations
face more regulations and double taxation as compared to proprietorships
and partnerships.
The threat of a takeover will encourage managers to
maximize shareholders wealth.
Failing to do so will result in the
takeover--and in the managers losing their jobs.
Bond covenants are a
way to resolve conflicts between management and bondholders. In general,
there is more uncertainty about the quality of small firms, compared to
large firms. This makes it harder for small companies to raise outside
capital.
Chapter 1 - Page 14