Question 1

According to an article in the French newspaper Le Figaro,French firms that are mostly privately held are out-performed by firms that are more widely held public firms. Note: In this context performance is measured by return to the owners.

Accepted Answer

A) True 
 B)False

Question 2

Mary Chalmers ,who lives in Minnesota,purchased 100 shares of Delton Cables,a diversified machinery company headquartered in Germany.She purchased the stock in January of 2011 for €62.50 per share when the exchange rate was at $1.330/€.Today,the stock is trading for €68.00 per share and the exchange rate is $1.48/€.If Mary sells her shares today,what is the return on her investment due to changes in the exchange rate?

Accepted Answer

A) 11.28% 
B) 20.08% 
C) 8.80% 
D) 26.41%

Question 3

Which of the following is generally NOT considered to be a viable operational goal for a firm?

Accepted Answer

A) maintaining a strong local currency 
B) maximization of after-tax income 
C) minimization of the firm's effective global tax burden 
D) correct positioning of the firm's income, cash flows and available funds as to country and currency

Question 4

When discussing the structure of corporate governance,the authors distinguish between internal and external factors.________ is an example of an internal factor,and ________ is an example of an external factor.

Accepted Answer

A) Equity markets; executive management 
B) Debt markets; board of directors 
C) Executive management; auditors 
D) Auditors; regulators

Question 5

Benny Simpson is considering an investment in Pontoon Industries Inc.He anticipates a dividend of $0.50 next year and an increase in the stock price from the current price of $18.25 per share to $20 per share.If he plans to hold the stock for one year,should Mr Simpson buy the stock if he requires an annual return of 12% on similar-risk investments?

Accepted Answer

A) no, because his anticipated return of 2.74% is exceeded his required return of 12% 
B) no, because his anticipated return of 9.59% is exceeded his required return of 12% 
C) yes because his anticipated return of 12.33% exceeds his required return of 12% 
D) There is not enough information to answer this question.

Question 6

What are frequently taught as universal truths in a finance classroom may in fact just be cultural norms.

Accepted Answer

A) True 
 B)False

Question 7

The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed ________.

Accepted Answer

A) corporate governance 
B) Anglo-American activism 
C) capital structure 
D) working capital management

Question 8

Which of the following is a common operational financial objective for MNEs?

Accepted Answer

A) maximization of consolidated after-tax income 
B) maximization of interest expense 
C) minimization of revenues from other countries 
D) minimization of total assets held in foreign locations

Question 9

Compare and contrast the Shareholder Wealth Maximization model and the Stakeholder Capitalism model for purposes of managerial goals.

Accepted Answer

The answer of Compare and contrast the Shareholder Wealth Maximization...

Question 10

Which of the following is a common operational financial objective for MNEs?

Accepted Answer

A) maximization of interest expense 
B) minimization of revenues from other countries 
C) correct positioning of the firm's income, cash flow, and available funds as to country and currency 
D) minimization of total assets held in foreign locations

Question 11

"Maximize corporate wealth"

Accepted Answer

A) is the primary objective of the European/Japanese model of management. 
B) as a management objective treats shareholders on a par with other corporate stakeholders such as creditors, labor, and local community. 
C) has a broader definition than just financial wealth. 
D) all of the above

Question 12

If share price falls from $15 to $12 per share,and pays a dividend of $1 per share,what was the rate of return to shareholders?

Accepted Answer

A) 13.33% 
B) -13.33% 
C) 16.67% 
D) -16.67%

Question 13

Which of the following do NOT enhance control of publicly traded firms by select groups of shareholders?

Accepted Answer

A) dual classes of stock with differential voting rights 
B) simultaneous election of members of the board of directors 
C) interlocking directorates 
D) takeover safeguards

Question 14

During the 1990s,rapidly increasing stock prices exposed a flaw in the shareholder wealth maximization model,the seeking of short-term value maximization. Such behavior by management is characterized by all but which of the following?

Accepted Answer

A) a focus on quarterly earnings 
B) overly generous use of stock options to motivate management 
C) improper reporting of earnings by management 
D) All of the above may be characteristics of short-term value maximization.

Exam 2: Financial Goals and Corporate Governance

According to an article in the French newspaper Le Figaro,French firms that are mostly privately held are out-performed by firms that are more widely held public firms. Note: In this context performance is measured by return to the owners.

Which of the following is generally NOT considered to be a viable operational goal for a firm?

When discussing the structure of corporate governance,the authors distinguish between internal and external factors. is an example of an internal factor,and is an example of an external factor.

What are frequently taught as universal truths in a finance classroom may in fact just be cultural norms.

The relationship among stakeholders used to determine and control the strategic direction and performance of an organization is termed ________.

Which of the following is a common operational financial objective for MNEs?

Compare and contrast the Shareholder Wealth Maximization model and the Stakeholder Capitalism model for purposes of managerial goals.

Which of the following is a common operational financial objective for MNEs?

"Maximize corporate wealth"

If share price falls from $15 to $12 per share,and pays a dividend of $1 per share,what was the rate of return to shareholders?

Which of the following do NOT enhance control of publicly traded firms by select groups of shareholders?

During the 1990s,rapidly increasing stock prices exposed a flaw in the shareholder wealth maximization model,the seeking of short-term value maximization. Such behavior by management is characterized by all but which of the following?