Chapter 2

3549 WordsAug 6, 201515 Pages
Fundamentals of Multinational Finance, 4e (Moffett) Chapter 2 Financial Goals and Corporate Governance Multiple Choice and True/False Questions 2.1 Who Owns the Business? 1) The authors suggest that the most likely progression of ownership goes from A) 100% privately held, to 80% privately held, to 40% privately held, to 0% privately held. B) 0% privately held, to 40% privately held, to 80% privately held, to 100% privately held. C) privately held firms stay private, and publicly traded firms stay public. D) none of the above. Answer: A Diff: 1 Topic: 2.1 Business Ownership Skill: Recognition 2) Which of the following do NOT enhance control of publicly traded firms by select groups of shareholders? A) dual classes of stock…show more content…
A) 11.28% B) 20.08% C) 8.80% D) 26.41% Answer: A Diff: 2 Topic: 2.1 Business Ownership Skill: Analytical 10) 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 price appreciation of the stock? A) 11.28% B) 20.08% C) 8.80% D) 26.41% Answer: C Diff: 2 Topic: 2.1 Business Ownership Skill: Analytical 2.2 What is the Goal of Management? 1) The shareholder wealth maximization model assumes as a universal truth that the market is efficient. Answer: TRUE Diff: 1 Topic: 2.2 Goal of Management Skill: Conceptual 2) What are frequently taught as universal truths in a finance classroom may in fact just be cultural norms. Answer: TRUE Diff: 1 Topic: 2.2 Goal of Management Skill: Conceptual 3) 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? 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

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