Professional Documents
Culture Documents
4 out of 4 points
Various executive compensation plans have been employed to motivate managers to
make decisions that maximize shareholder wealth. These include:
Answer
Selected Answer:
requiring officers to own stock in the company
Correct Answer:
requiring officers to own stock in the company
Question 2
4 out of 4 points
Economic profit is defined as the difference between revenue and ____.
Answer
Selected Answer:
total economic cost
Correct Answer:
total economic cost
Question 3
4 out of 4 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
4 out of 4 points
Which of the following will increase (V0), the shareholder wealth maximization model
of the firm: V
0
(shares outstanding) =
t=1
(
t
) / (1+k
e
)
t
+ Real Option Value.
Answer
Selected Answer:
Decrease the required rate of return (ke).
Correct Answer:
Decrease the required rate of return (ke).
Question 5
4 out of 4 points
The primary objective of a for-profit firm is to ___________.
Answer
Selected Answer:
maximize shareholder value
Correct Answer:
maximize shareholder value
Question 6
4 out of 4 points
In the shareholder wealth maximization model, the value of a firm's stock is equal to the
present value of all expected future ____ discounted at the stockholders' required rate of
return.
Answer
Selected Answer:
profits (cash flows)
Correct Answer:
profits (cash flows)
Question 7
4 out of 4 points
Generally, investors expect that projects with high expected net present values also will
be projects with
Answer
Selected Answer:
high risk
Correct Answer:
high risk
Question 8
4 out of 4 points
An closest example of a risk-free security is
Answer
Selected Answer:
U.S. Government Treasury bills
Correct Answer:
U.S. Government Treasury bills
Question 9
4 out of 4 points
The ____ is the ratio of ____ to the ____.
Answer
Selected Answer:
coefficient of variation; standard deviation; expected value
Correct Answer:
coefficient of variation; standard deviation; expected value
Question 10
4 out of 4 points
The primary difference(s) between the standard deviation and the coefficient of variation
as measures of risk are:
Answer
Selected
Answer:
the coefficient of variation is a measure of relative risk whereas the
standard deviation is a measure of absolute risk
Correct
Answer:
the coefficient of variation is a measure of relative risk whereas the
standard deviation is a measure of absolute risk
Question 11
4 out of 4 points
Based on risk-return tradeoffs observable in the financial marketplace, which of the
following securities would you expect to offer higher expected returns than corporate
bonds?
Answer
Selected Answer:
common stock
Correct Answer:
common stock
Question 12
4 out of 4 points
The approximate probability of a value occurring that is greater than one standard
deviation from the mean is approximately (assuming a normal distribution)
Answer
Selected Answer:
15.87%
Correct Answer:
15.87%
Question 13
0 out of 4 points
A price elasticity (E
D
) of 1.50 indicates that for a ____ increase in price, quantity
demanded will ____ by ____.
Answer
Selected Answer:
one unit; increase; 1.50 units
Correct Answer:
one percent; decrease; 1.50 percent
Question 14
4 out of 4 points
If demand were inelastic, then we should immediately:
Answer
Selected Answer:
raise the price.
Correct Answer:
raise the price.
Question 15
0 out of 4 points
Marginal revenue (MR) is ____ when total revenue is maximized.
Answer
Selected Answer:
equal to minus one
Correct Answer:
equal to zero
Question 16
4 out of 4 points
When demand is ____ a percentage change in ____ is exactly offset by the same
percentage change in ____ demanded, the net result being a constant total consumer
expenditure.
Answer
Selected Answer:
unit elastic; price; quantity
Correct Answer:
unit elastic; price; quantity
Question 17
4 out of 4 points
Those goods having a calculated income elasticity that is negative are called:
Answer
Selected Answer:
inferior goods
Correct Answer:
inferior goods
Question 18
4 out of 4 points
Iron ore is an example of a:
Answer
Selected Answer:
producers' good
Correct Answer:
producers' good
Question 19
4 out of 4 points
Songwriters and composers press music companies to lower the price for music
downloads because
Answer
Selected Answer:
songwriter royalties are a percentage of sales revenue
Correct Answer:
songwriter royalties are a percentage of sales revenue
Question 20
0 out of 4 points
The constant or intercept term in a statistical demand study represents the quantity
demanded when all independent variables are equal to:
Answer
Selected Answer:
1.0
Correct Answer:
0.0
Question 21
0 out of 4 points
The estimated slope coefficient (b) of the regression equation (Ln Y = a + b Ln X)
measures the ____ change in Y for a one ____ change in X.
Answer
Selected Answer:
unit, unit
Correct Answer:
percentage, percent
Question 22
0 out of 4 points
One commonly used test in checking for the presence of autocorrelation when working
with time series data is the ____.
Answer
Selected Answer:
t-test
Correct Answer:
Durbin-Watson test
Question 23
0 out of 4 points
The standard deviation of the error terms in an estimated regression equation is known
as:
Answer
Selected Answer:
Durbin-Watson statistic
Correct Answer:
standard error of the estimate
Question 24
0 out of 4 points
Even though insignificant explanatory variables can raise the adjusted R2 of a demand
function, one should not interpret their effects on the regression when
Answer
Selected Answer:
forecasting unit sales for operations planning
Correct Answer:
testing marketing hypotheses about the determinants of demand
Question 25
4 out of 4 points
In regression analysis, the existence of a significant pattern in successive values of the
error term constitutes:
Answer
Selected Answer:
autocorrelation
Correct Answer:
autocorrelation