1. Which of the following is a financial asset? a. An experienced and hardworkin
ID: 2625816 • Letter: 1
Question
1. Which of the following is a financial asset? a. An experienced and hardworking sales force b. A trademark c. A bank loan d. Undeveloped land
2. Which of the following decisions will affect Pfizer's capital structure? a. acquire another pharmaceutical company b. pay out dividends c. issue new corporate bonds d. spend $7.6 billion on research and development of new drugs
3. A manager's compensation plan that only offers financial incentives for increases in quarterly profitability may create agency problems in that: a. The managers are not motivated by personal gain. b. Short-term profits, not long-term shareholder values become the focus. c. The board of directors may claim the credit. d. It does not help to improve the social responsibility performance of the firm.
4. Apple Computer is well known for its product innovations. Access to financing was not vital to Apple's growth and profitability. a. True b. False
5. Ethical decision making by management has a payoff for shareholders in terms of: a. enhanced reputation value b. increased managerial benefits c. improved capital structure d. higher dividend payments
6. "Double taxation" refers to: a. paying taxes on profits at the corporate level and dividends at the personal level b. all partners paying equal taxes on profits c. corporations paying taxes on both dividends and retained earnings d. the fact that marginal tax rates are doubled for corporations
7. The agency problem in a corporation is due to: a. its limited liability b. double taxation for corporations c. perpetual life of the corporation d. the separation of ownership and management
8. The stock price (post dividend) for IBM is $187.5. Earnings per share is $14.5. Book value per share is $18.3. The number of shares outstanding is 1.08 billions. What is the total shareholder value for IBM? a. $15.66 Billion, which is the total earning b. $202.5 Billion, which is the market cap c. $1.08 Billion d. $19.764 Billion, which is the total book value
9. Today, Kate bought 1,000 shares of Apple Inc. for $119.46 per share in the secondary market. Apple Inc. receives ________ from Katherine? a. Nothing. b. The dollar value of the transaction. c. The dollar amount of the transaction, less brokerage fees. d. Only the book value of the common stock.
Explanation / Answer
1) An asset that derives value because of a contractual claim. Stocks, bonds, bank deposits, and the like are all examples of financial assets. As undeveloped land and trademark are real assets and bank loan is a debt (liability) the answer is An experienced and hardworking sales force.
Hence answer is An experienced and hardworking sales force.
2)
Definition of 'Capital Structure' : A mix of a company's long-term debt, specific short-term debt, common equity and preferred equity.
Hence the only option which will change this is to issue new corporate bonds = ANswer
3) Quarterly profitability is a short term goal and hence, to achieve it, the managers may take steps which might harm the business in the long run. Hence, the answer is:
b. Short-term profits, not long-term shareholder values become the focus.
4) False.
Most companies need acces to financing for their operations and R & D activities.
(On December 12, 1980, Apple launched the Initial Public Offering of its stock to the investing public.)
5) Ethical decisions made by management can enhance the trust people have in the company, making it more likely that they will do business with the company (this is in the long term will improve profitability).
Ethical decision making by management leads to creation of a good reputation to the company. All other options are either not caused by ethical decision making by management or do not affect shareholders. Hence the answer is a. enhanced reputation value
6) A taxation principle referring to income taxes that are paid twice on the same source of earned income.When corporations pay out dividends to shareholders, those dividend payments incur income-tax liabilities for the shareholders who receive them, even though the earnings that provided the cash to pay the dividends were already taxed at the corporate level.
Hence the answer is a. paying taxes on profits at the corporate level and dividends at the personal level
7) In corporate finance, the agency problem usually refers to a conflict of interest between a company's management and the company's stockholders. The manager, acting as the agent for the shareholders, or principals, is supposed to make decisions that will maximize shareholder wealth. However, it is in the manager's own best interest to maximize his own wealth.
Hence, the answer is d. the separation of ownership and management
8) total shareholder value = Market value of total outstanding shares = $ 187.5 * 1.08 billion = $ 202.5 biilion = Answer
9) A secondary marketis a market where investors purchase securities or assets from other investors, rather than from issuing companies themselves.
Hence the company gets nothing out of it => Answer is a. Nothing
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.