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- QUESTION 39 Which of the following is incorrect: A. The Market for Corporate Control is an important external mechanism for encouraging corporate managers to act in their shareholders’ best interests B. GMU Dean Emeritus Henry G. Manne developed the theoretical concept of "Market for Corporate Control" C. The Market for Corporate Control was enacted into law by the Williams Act D. The Market for Corporate Control protects rationally ignorant shareholders E. None of the aboveخـــــتـــام, [21.06.20 14:51](Treasury Stock—Ethics) Lois Kenseth, president of Sycamore Corporation,is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation’s CEO. She decidesthat buying them out by purchasing their shares could eliminate them as opponents, and she is confi dentthey would accept a “good” off er. Kenseth knows the corporation’s cash position is decent, so it has the cashto complete the transaction. She also knows the purchase of these shares will increase earnings per share,which should make other investors quite happy. (Earnings per share is calculated by dividing net incomeavailable for the common shareholders by the weighted-average number of shares outstanding. Therefore, ifthe number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.)InstructionsAnswer the following questions.a. Who…6) What is the mechanism for mitigating the agency problem? 1.I). Using the firm's stock options for compensation 2.II). Hiring bickering family members as corporate spies 3.III). Boards of directors forcing out underperforming management 4.IV). Security analysts monitoring the firm closely 5.V). Takeover threats A) II and V B) I, III, and IV C) I, III, IV, and V D) III, IV, and V E) I, III, and V Also state justification for the chosen answer.
- QUESTION 40 Henry Manne notes that a policy making it easy to fight off hostile takeovers would dilute: A. The ability of new shareholders to enter the investment B. The market for corporate control C. The power of free-flowing capital D. The stock options of high-level executives E. Congressional insider tradingQ1. Investment banks are guilty of conflict of interest when they [ can select more than 1 answer] * A) pressure their analysts to produce research favorable to their client firms. B) permit executives of client firms to alter analysts' research on their firms. C) prohibit analysts from making negative or controversial comments about client firms. D) allow executives of potential client companies to buy underpriced initial public offerings of other companies' securities.H7. Lois Kenseth, president of Sycamore Corporation, is concerned about several large stockholders who have been very vocal lately in their criticisms of her leadership. She thinks they might mount a campaign to have her removed as the corporation's CEO. She decides that buying them out by purchasing their shares could eliminate them as opponents, and she is confident they would accept a “good” offer. Kenseth knows the corporation's cash position is decent, so it has the cash to complete the transaction. She also knows the purchase of these shares will increase earnings per share, which should make other investors quite happy. (Earnings per share is calculated by dividing net income available for the common shareholders by the weighted-average number of shares outstanding. Therefore, if the number of shares outstanding is decreased by purchasing treasury shares, earnings per share increases.) (a) Who are the stakeholders in this situation? (b) What are the ethical issues involved?…
- 28.In the absence of evidence to the contrary, the investor is presumed to have the ability to exercise significant influence if he owns at least_______ of the common stock of the other company. Select one: a. 33 1/3%. b. 40%. c. twenty%. d. fifty%.Question 7.14 Page 571. Accounting for stock-based compensation Historically, technology firms have been the most aggressive users of stock-based compensation in the form of stock options granted to almost all employees of the firms. What is the rationale for offering stock options as compensations? Why has this form of compensation been particularly popular with technology firms in the past?46. Which of the following situations are likely to reduce agency conflicts between stockholders and managers? Group of answer choices a. Paying managers large fixed salaries. b. Enacting laws that increase the likelihood of corporate takeovers. c. Placing restrictive covenants in debt agreements like avoiding risky projects. d. All of the statements are correct. e. Two of the statements are correct.
- chatper 9 #1 Assume a 0.35 tax rate. To pay 0.10 to investors, a company must earn what return (before tax) if the security is Debt? Preferred stock? Common stock? What after-tax internal rate of return must an investment earn for a corporation to supply sufficient cash flows to pay a before-tax (personal) 0.10 to d Debtholders? Preferred stockholders? Common stockholders?8. Which statement is true? Group of answer choices a. Preferred stock is similar to corporate bonds because the corporation usually pays the holders of the securities a fixed amount. b. Preferred stockholders have priority over bondholders when it comes to the payment of c. Preferred stock is similar to corporate bonds because dividends on preferred stock, like interest on bonds, are a tax-deductible expense to the corporation. d. Preferred stockholders are considered to be the true owners of corporations.