NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting&

Question

NEW YORK INSTITUE OF TECHNOLOGY SCHOOL OF MANAGEMENT (Department of Accounting& Finance) Corporate Finance (FINC 201-M01) Final Exam Maximum points: 100 Prof. Raja Nag November 20, 2017 Time: 120 minutes Note: Show work for partial/full credit when you attempt the problems. For example, draw time lines, write formulae, and write calculator inputs, where applicable. Good Luck !!) Name: SID: SECTION I: MULTIPLE CHOICE:20x1-20 points) - In each question there is only one correct answer. Select and circle the answer you believe to be most correct 1) What is the primary goal of corporate financial management? a. Increased earnings b. Maximizing cash flow. c. Maximizing shareholder wealth. d. Minimizing risk of the firm. 2) Agency theory deals with the issue of a. when to hire an agent to represent the firm in negotiations. b. the legal liabilities of a firm if an employee, acting as a firm's agent, injures someone. or bind the firm. owners and managers. c. the limitations placed on an employee acting as the firm's agent to obligate d. the conflicts that can arise between the viewpoints and motivations of a firm's 3) A corporation is a. owned by stockholders who enjoy the privilege of limited liability. b. easily divisible between owners. c. a separate legal entity with perpetual life. d. all of the above.

Explanation / Answer

1

Maximizing shareholder wealth

2

the conflicts that can arise between the viewpoints and motivations of a firm's owners and managers

3

all of the above

4

decreases

5

all of the above

6

a finite series of consecutive payments of equal amounts

7

par, discount, premium

8

zero coupon bond

9

dividends, retained earnings

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