hw1 - HW# 1 Answer Sheet Name:_ Class Time:_ Instructions...

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HW# 1 Answer Sheet Name:_________________________________ Class Time:______________________________ Instructions 1) Submit this page only for multiple choice Qs. Multiple Choice Questions** problem # Answer 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23
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1 The primary goal of financial management is to: A) Maximize cur ent sales. B) Maximize the cur ent value per share of the existing stock. C) Avoid financial distress. D) Minimize operational costs. E) Maintain steady earnings growth. 2 Agency costs refer to: A) The total dividends paid to shareholders over the lifetime of the firm. B) The costs that result from default and bankruptcy of the firm. C) Corporate income subject to double taxation. D) The total interest paid to creditors over the lifetime of the firm. E) The costs of the conflict of interest between stockholders and management. 3 Ann is interested in purchasing Ted's factory. Since Ann is a poor negotiator, she hires Mary to negotiate the purchase price. Identify the parties to this transaction. A) Mary is the principal and Ann is the agent. B) Ted is the principal and Ann is the agent. C) Mary is the agent while Ted and Ann together are principals. D) Ann is the principal and Mary is the agent. E) Ann is the principal and Ted is the agent. 4 A financial manager of a corporation is considering dif erent operating strategies for the coming year. From a financial management standpoint, which of the fol owing would be her optimal strategy? A) Undertake the plan that would reduce the overal riskiness of the firm. B) Undertake the plan that would maximize the cur ent stock price. C) Undertake the plan that would result in the largest profits for the year. D) Undertake the plan that would maximize her personal wealth. E) Undertake the plan that would lead to the most stable stock price for the year. 5 Of the fol owing, which statement regarding agency costs is false? A)
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This note was uploaded on 02/08/2012 for the course FINA 365 taught by Professor Koch during the Spring '08 term at South Carolina.

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hw1 - HW# 1 Answer Sheet Name:_ Class Time:_ Instructions...

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