WPC 150: Finance Quiz Latest Update Already Passed

WPC 150: Finance Quiz Latest Update Already Passed Costs associated with the conflicts of interest between the managers and the shareholders of a corporation are called: agency costs. One way to mitigate agency problems is to include shares of company stock in executive compensation packages. True Present value is defined as: future cash flows discounted to the present by an appropriate discount rate. Understanding basic principles of finance is important for All of the above If stock markets are efficient, which of the following statements is false You can beat the market by adopting an active trading strategy If you buy enough different stocks, you can diversify out all risk in the stock market False A dollar today is worth more than a dollar tomorrow if the interest rate is positive. True Which of the following groups are referred to as stakeholders? employees, customers, shareholders, and suppliers The discount rate is higher for safe investments than for risky ones. False Which of the following assets is tangible? ExxonMobil's corporate headquarters building In general, firms that adopt socially responsible corporate practices do so at the expense of the firms' shareholders. False Diversification reduces the risk of a portfolio because the prices of different securities do not move exactly together. True From the study of behavioral finance, we have learned that limited attention bias can explain why minority groups face frictions in accessing financial resources. False One can find the change in wealth from an investment by subtracting the present value of its required investment from the present value of its future cash flows. True Bubbles and crashes are examples of "anomalies" that challenge the notion that markets are efficient True In financial planning, which of the following statements about asset allocation is false. Asset allocation should not be affected by an individual's attitude towards risk. Investors who are risk-averse do not invest in risky securities like common stocks. False Which of the following portfolios has the least risk? A portfolio of Treasury bills The concept of compound interest is best described as: interest earned on interest. Which portfolio should earn the highest average