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
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
