BA 323 BRINCKS EXAM 1 | ALL QUESTIONS AND CORRECT ANSWERS | GRADED A+ | NEWEST VERSION | VERIFIED ANSWERS

1



BA 323 BRINCKS EXAM 1 | ALL QUESTIONS AND
CORRECT ANSWERS | GRADED A+ | NEWEST
VERSION | VERIFIED ANSWERS
main goal of corporation - ..(ANSWER)...maximize value



who owns a corporation? - ..(ANSWER)...shareholders



relationship between shareholders, board, management -
..(ANSWER)...shareholders elect board

board appoints management



3 important management positions - ..(ANSWER)...CEO, CFO, COO



sarbanes oxley act - ..(ANSWER)...CEO & CFO must certify reports

prevents fraud



advantage of corporations - ..(ANSWER)...easy to raise capital



disadvantage of corporations - ..(ANSWER)...double taxation



stock's intrinsic value - ..(ANSWER)...stocks theoretical actual value (long term
concept)

, 2


will a stock's price = intrinsic value in efficient market? - ..(ANSWER)...YES!



cause of shareholder-management conflict - ..(ANSWER)...managers are inclined
to act in their best self interest



affects manager behavior - ..(ANSWER)...compensation packages

intervention from shareholders

threat of firing/takeover



corporate governance def. - ..(ANSWER)...holds managers accountable by
watching actions



aligning management/shareholder interests (strong corp. governance) -
..(ANSWER)...compensation in stocks instead of cash

long vesting periods

strong oversight by board



compensation in 1980s - ..(ANSWER)...shift from cash to stock



why would CEO compensation track S&P 500? - ..(ANSWER)...align interests of
shareholder & management



bondholders prefer ____ corporate investments - ..(ANSWER)...safer