Question 1
5 out of 5 points | | | Which of the following will increase (V0), the shareholder wealth maximization model of the firm: V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t + Real Option Value.Answer | | | | | Selected Answer: | Decrease the required rate of return (ke). | Correct Answer: | Decrease the required rate of return (ke). | | | | |
Question 2
5 out of 5 points | | | A Real Option Value is:Answer | | | | | Selected Answer: | An opportunity to implement a new cost savings or revenue expansion activity that arises from business plans that the managers adopt. | Correct Answer: | An opportunity to implement a new cost savings or revenue expansion activity that arises from business plans that the managers adopt. | | | | |
Question 3
5 out of 5 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
5 out of 5 points | | | The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?Answer | | | | | Selected Answer: | Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. | Correct Answer: | Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. | | | | |
Question 5
5 out of 5 points | | | The closest example of a risk-free security isAnswer | | | | | Selected Answer: | U.S. Government Treasury bills | Correct Answer: | U.S. Government Treasury bills | | | | |
Question 6
5 out of 5 points | | | Based on risk-return tradeoffs observable in the