Question Eco 550 Quiz 1 (2013)

Question 1 3 out of 3 points

To reduce Agency Problems, executive compensation should be designed to:

Question 2 3 out of 3 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.

Question 3 3 out of 3 points

The primary objective of a for-profit firm is to ___________.

Question 4 0 out of 3 points

The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?

Question 5 0 out of 3 points

Various executive compensation plans have been employed to motivate managers to make decisions that maximize shareholder wealth. These include:

Question 6 3 out of 3 points

A Real Option Value is:

Question 7 3 out of 3 points

The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?

Question 8 3 out of 3 points

Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:

Question 9 3 out of 3 points

Which of the following will increase (V0), the shareholder wealth maximization model of the firm:

V0?(shares outstanding) = ??t=1 (? t ) / (1+ke)t + Real Option Value.

Question 10 3 out of 3 points

Economic profit is defined as the difference between revenue and ____.

Question 11 0 out of 3 points

The approximate probability of a value occurring that is greater than one standard deviation from the mean is approximately (assuming a normal distribution)

Question 12 3 out of 3 points

The ____ is the ratio of ____ to the ____.

Question 13 3 out of 3 points

The closest example of a risk-free security is

Question 14 0 out of 3 points

Generally, investors expect that projects with high expected net present values also will be projects with

Question 15 3 out of 3 points

A change in the level of an economic activity is desirable and should be undertaken as long as the marginal benefits exceed the ____.

Question 16 3 out of 3 points

The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:

Question 17 3 out of 3 points

The level of an economic activity should be increased to the point where the ____ is zero.

Question 18 3 out of 3 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?

Question 19 3 out of 3 points

The standard deviation is appropriate to compare the risk between two investments only if

Question 20 3 out of 3 points

The net present value of an investment represents

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