SOLVED

21) Wealth maximization is consistent with ethical behavior because A) Managers tend to focus on long-term results not immediate performance B) All unethical behavior by managers is known and ethical shareholders will not hold shares in their companies C) Any unethical behavior always results in legal proceedings against the company D) Low wages and poor working conditions do not produce quality, innovative products E) In the short term, ethical behavior is always more cost-effective than unethical behavior 22) The Sarbanes-Oxley Act requires senior executives of companies to A) Ensure the confidentiality and privacy of financial information B) Provide a code of ethics for employees C) Ensure all financial statements are audited D) Provide full and fair disclosure of all financial agreements E) Certify the effectiveness of internal controls against fraud 23) ________ is used to describe that the ways in which companies are directed and controlled. A) Agency Agreement B) Mission Statement C) Incorporation Resolutions D) Corporate Governance E) Annual Report 24) The Principals of a corporation are its A) Managers B) Shareholders C) Lenders D) Executives E) Customers 25) Last year, the EPS, for 250,000 shares outstanding was $4, for a company with invested capital of $21 million. What was the Company’s net income that year? A) $84,000,000 B) $5,250,000 C) $1,000,000 D) $336,000 E) $62,500 26) ________ is the term used to describe a situation where the interests of the shareholders conflict with the senior managers who have been hired to run the company. A) Agency Problem B) Principal Problem C) Delegation Problem D) Arms length Attenuation E) The Governance Gap 27) Shareholders are most likely to discover a conflict with senior managers when A) The information available to shareholders about management decisions is limited B) There are few opportunities for shareholders to invest their money C) Shares are spread over a very large number of shareholders D) Shareholders closely track the use of resources by the Company E) The availability of management talent is limited 28) Share options are used by shareholders to reward senior managers because managers will A) Become shareholders and their interests will become more closely aligned with the shareholders who hired them B) Value the reward as they can sell the shares immediately for cash C) Try to increase the Company’s short-term gain, to sell their shares for greater profit D) Avoid taking risks, to ensure the price of their shares does not calling E) Appreciate any potential tax benefits from owning Canadian shares 29) The guiding principle that deals with adequate and timely information about corporate performance is called A) Accountability B) Fairness C) DueProcess D) Transparency E) Disclosure 30) The most important advantage to a business in hiring outside directors is that A) In not being full-time employees, they are more independent than executive directors B) In not being involved in day-to-day management, they can have a broad view of the Company C) In being wholly paid in stock options, they are more likely to have the same interests as the shareholders D) In being most often retired or semi-retired, they have more time to spend directing the business E) In not being involved in day-to-day management, they are less likely to act in a fraudulent manner