Chapters 1-2 Flashcards
- Institutional investors are important in today’s business world because
as a group they can vote large blocks of stock for the election of board members.
- Who is accountable for social responsibility within a firm?
The board of directors
- Companies that perform well
can minimize dilution when issuing new shares and can issue debt at a lower interest rate.
- Capital markets do not include which of the following securities?
Commercial paper
- One of the major advantages of a sole proprietorship is
low operating costs
The internationalization of the financial markets has
allowed firms such as McDonald’s to raise capital around the world.
- Agency problems are least likely to arise in which organizational form?
Sole proprietorship
- Increased productivity due to technology has?
helped to keep corporate costs in check.
- The Internet has affected the financial markets by?
creating more competition between markets.
pushing the cost of trading down.
forcing brokerage companies to consolidate.
- A corporation is
owned by stockholders who enjoy the privilege of limited liability.
easily divisible between owners.
a separate legal entity with unlimited life.
- Agency theory examines the relationship between the
owners of the firm and the managers of the firm.
- Future financial managers will need to understand
international cash flows.
computerized funds transfers.
international currency hedging strategies.
- Which of the following is not a true statement about the goal of maximizing shareholder wealth?
It is a short-run point of view
- With an S corporation
income is taxed as direct income to stockholders.
- Credit default swaps are
an insurance product designed to protect financial institutions from customers who default on their loans.
