Selected Answer: Answers: By hiring "creative" people instead of "logical" people.
By linking manager compensation to stock price improvement. By hiring a diverse group of employees to manage the firm. By allowing employees to opt out of the social security system to increase their take home pay. Question 18 5 out of 5 points What is meant by the term "information asymmetry" in a corporation? Selected Answer: Answers: It means that company insiders and managers have information that stockholders do not have. It means that shareholders have information that is not known to the public yet. It means that the stock price is going to go up soon. It means that sometimes the stock price is not visible to traders on the NYSE due to power outages and other national emergencies. Question 19 0 out of 5 points What are three factors that managers can control that affect the firm's stock price? Selected Answer: Answers: economic shocks, laws and regulations, and the business environment the magnitude, timing, and risk of the firm's cash flows the level of economic activity, the level of interest rates, and sales revenue the number of customers, the level of interest rates, and the accounting profits Question 20 5 out of 5 points Net working capital is equal to Selected Answer:
Answers: total assets minus total liabilities current assets minus current liabilities cash minus inventory cash plus accounts receivable Governments are the principal lender-savers in the economy. Selected Answer: False Answers: True False Question 2 3 out of 3 points A primary market is any financial market in which owners of outstanding securities can resell them to other investors. Selected Answer: False Answers: True False Question 3 3 out of 3 points The existence of an active secondary market for a security will help enhance the price for a security in the primary market. Selected Answer: True Answers: Tru e False Question 4 3 out of 3 points Equities are generally traded in the capital market. Selected Answer: True Answers: Tru e False Question 5
3 out of 3 points Real rates of interest are perfectly observable. Selected Answer: False Answers: True False Question 6 5 out of 5 points What is the role of the financial system? Selected Answer: Answers: To make sure there is full employment in the economy To channel To set interest rates and borrowing costs for the economy To collect income taxes from individuals and corporations Question 7 5 out of 5 points What are the two major components of the financial system?