Question Details

To reduce Agency Problems, executive compensation should be designed to



1.	Economies of Scope refers to situations where per unit costs are:
a)	Unaffected when two or more products are produced
b)	Reduced when two or more products are produced
c)	Increased when two or more products are produced
d)	Demonstrating constant returns to scale
e)	Demonstrating decreasing returns to scale
2.	Which of the following will increase (V0), the shareholder wealth maximization model of the firm:
V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t   + Real Option Value.
a)	 Decrease the required rate of return (ke).
b)	Decrease the stream of profits (Ï€t).
c)	Decrease the number of periods from ∞ to 10 periods.
d)	Decrease the real option value.
3.	Which of the following will increase (V0), the shareholder wealth maximization model of the firm:
V0∙(shares outstanding) = Σ∞t=1 (π t ) / (1+ke)t   + Real Option Value.
a)	Decrease the required rate of return (ke).
b)	Decrease the stream of profits (Ï€t).
c)	Decrease the number of periods from ∞ to 10 periods.
d)	Decrease the real option value.
4.	To reduce Agency Problems, executive compensation should be designed to:
a)	create incentives so that managers act like owners of the firm.
b)	avoid making the executives own shares in the company.
c)	be an increasing function of the firm's expenses.
d)	be an increasing function of the sales revenue received by the firm.
5.	Possible goals of Not-For-Profit (NFP) enterprises include all of the following EXCEPT:
a)	maximize total costs
b)	maximize output, subject to a breakeven constraint
c)	maximize the happiness of the administrators of the NFP enterprise
d)	maximize the utility of the contributors
6.	Income tax payments are an example of ____.
a)	implicit costs
b)	explicit costs
c)	normal return on investment
d)	shareholder wealth




Business Assignment Help, Business Homework help, Business Study Help, Business Course Help