Question 1 f seek that combination of assets, liabilities, and capital which wil

Question

Question 1 f seek that combination of assets, liabilities, and capital which will generate way to state the One financial managers should the largest expected projected income over the relevant time horizon. True managcrs dision framework most useful for carrying out the firm's objective is that the False Question A financial manager's task is to make decisions conceming the acquisition and use of funds for the greatest benefit of the firm. True Question 3 False The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed True False Question 4 Normal profits are those that result in rates of return that are not sufficient to attract new capital in financial markets. True Question 5 False Having the manager's compensation tied to the company's performance decreases the ageney problem that corporations face. True Question 6 The primary goal of a publicly-owned firm interested in serving its stockholders should be to False a) Minimize the debt used by a firm b) Maximize expected EPS c) Minimize the chances of losses. d) Maximize the stock price per share e Maximize expected net income Question 7 Which of the following mechanisms is used by shareholders to get managers to act in shareholder's best interests? a) Threat of firing b) Golden Parachute. c) Threat of takeover. d) Answers a and b above. e) Answers a and c above.

Explanation / Answer

Q - 1 ) ......True.

Q - 2) ........True

Q - 3) .......True ........... EPS is the end result so it incorporates both business risk and financial risk

Q - 4 ) ....True ..........Super normal profits will attract the new capital. Normal profits can be earned any where and financial markets don't seem attractive in that case.

Q- 5) .......True ........ Since with increase in new ventures and profits, compensation does also increase.

Q-6) ......d) Maximize the stock price of the share

Q - 7 ) .....a) Threat of firing

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