financial management overview9

financial management overview9 - Agency 1 . Answer: d Diff:...

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Agency Answer: d Diff: M 1 . Which of the following statements is most correct? a. One of the ways in which firms can mitigate or reduce agency problems between bondholders and stockholders is by increasing the amount of debt in the capital structure. b. The threat of takeover is one way in which the agency problem between stockholders and managers can be alleviated. c. Managerial compensation can be structured to reduce agency problems between stockholders and managers. d. Statements b and c are correct. e. All of the statements above are correct. Miscellaneous concepts Answer: e Diff: M 2 . Which of the following statements is most correct? a. Corporations face fewer regulations and taxes relative to sole proprietorships and partnerships. b. Managers who face the threat of hostile takeovers are less likely to pursue policies that maximize shareholder value compared to managers who do not face the threat of hostile takeovers. c. Bond covenants are an effective way to resolve agency conflicts
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This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

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financial management overview9 - Agency 1 . Answer: d Diff:...

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