448f05x2 - ECONOMICS 448 Exam 2 Fall 2005 NAME PLEDGE You...

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ECONOMICS 448 Exam 2 Fall 2005 NAME:________________________________ PLEDGE: ______________________________ You have one hour to complete this exam. You may take it in any open classroom in Quigley Hall, but you may not leave Quigley. You may not consult your notes, book, or classmates. The points awarded for each question should be correlated with the length of your answer. Please finish your answers on the back page if you need more space. 1. (3) Jensen and Meckling argue that as a firm uses more outside debt to finance its operations, the managers of the company will: a. Spend more of the firm’s money on perks. b. Spend more of the firm’s money on stock options. c. Follow investment strategies that are riskier than the debtholders wish. d. Follow investment strategies that are less risky than the debtholders wish. 2. (12) Provide a brief explanation for why Henry Manne doesn’t believe that antitrust regulations that limit horizontal mergers are necessarily good.
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3. (3) In the graphs above, we would consider Graph A to represent a consumer who is ______ and Graph B to represent someone who is ________, and Graph C to represent someone who is nuts. a. Risk neutral; risk loving. b. Risk neutral; risk averse. c. Risk averse; risk loving. d. Risk loving; risk neutral. 4. (3) In Graph B above, the consumer has a:
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This test prep was uploaded on 04/22/2008 for the course ECON 448 taught by Professor Nonnenmacher during the Fall '07 term at Allegheny.

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448f05x2 - ECONOMICS 448 Exam 2 Fall 2005 NAME PLEDGE You...

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