Exam 8: Firms,the Stock Market,and Corporate Governance

The CEO of Dynadyne corporation has been more concerned with enhancing his lifestyle by having the company pay for expensive corporate retreats than he has been with increasing the value of the company's stock.In this situation,the CEO is ________ and the stockholders are ________.

A cost that involves spending money is

Why do corporate boards of directors sometimes link top managers' compensation to the corporations' stock prices? How might tying compensation too closely to stock prices create an incentive for corporate fraud.

Angelica wants to open a restaurant and is thinking of setting it up as a corporation.What are the advantages and disadvantages she will face by setting up the business as a corporation as opposed to a sole proprietorship or a partnership?

The interest rate on a bond is calculated as

Abercrombie & Fitch wants to raise $8 million to finance the construction of a new store,and the company wishes to raise the funds through direct finance.Which of the following methods could it use?

On a balance sheet,short-term debts such as accounts payable are listed as

If you own a bond with a 3 percent coupon rate and new bonds are paying 8 percent,what will happen to your bond's market price?

An explicit cost is

Corporate governance refers to the way in which a corporation is structured and the effect that structure has on the corporation's behavior.

Which of the following statements is true?

Which of the following are examples of explicit costs a firm might incur?

A partnership can raise funds for expansion in which of the following ways?

Which of the following would be considered an implicit cost of operating a business?

As a form of business,a sole proprietorship

A corporation is owned by its

A sole proprietorship is limited to how many owners?

Tying the salaries of top managers to the firm's stock price or to the profitability of the firm allows a firm's board of directors to

If Southwest Airlines borrows $20 million from a bank to finance the renovation of their corporate offices,this is an example of

Richard Causey,former chief accounting officer for Enron,pleaded guilty to falsely reported costs for Enron that were ________ than they actually were,resulting in reported accounting profits for Enron that were ________ than their actual level.The financial statements were falsified to mislead investors about the profitability of the firm.