20/08/2019 Review Test Submission: Lecture 1: Online Assignment – ...

CoB (NBS) CHARLOTTE CHANG QI 27

Home Self-paced Learning My Filing Cabinet Library Tools Support Community

19S1-AB1201-LEC AB1201-FINANCIAL MANAGEMENT 2019/2020 Semester 1 Main Content

Lecture 1 - An Overview of Financial Management Review Test Submission: Lecture 1: Online Assignment

Review Test Submission: Lecture 1: Online Assignment

User CoB (NBS) CHARLOTTE CHANG QI

Course AB1201-FINANCIAL MANAGEMENT 2019/2020 Semester 1 Main
Test Lecture 1: Online Assignment
Started 8/20/19 8:37 PM
Submitted 8/20/19 8:41 PM
Due Date 8/26/19 11:59 PM
Status Completed
Attempt Score 40 out of 60 points  
Time Elapsed 3 minutes
Instructions Answer the questions to check your understanding of the concepts we have covered in
Lecture 1.

Results All Answers, Submitted Answers, Correct Answers, Feedback, Incorrectly Answered
Displayed Questions

Question 1 10 out of 10 points

Which of the following could explain why a business might choose to operate as a corporation
rather than as a sole proprietorship or a partnership?

Selected Answer: B. Corporations generally nd it easier to raise capital.

Answers: A. Investors in corporations are exposed to unlimited liability.

B. Corporations generally nd it easier to raise capital.

C. Ownership of a corporation is hard to be transferred.

D. Corporations generally face fewer regulations.

E. Less of a corporation's income is generally subject to taxes.

Question 2 10 out of 10 points

The term “marginal investor” means an investor who is active in the market and would tend to
buy a stock if its price fell and sell it if it rose, barring any new information coming out about the
stock.
It is the “marginal investor” who determines the actual stock price.

Selected Answer: True

Answers: True
False

Question 3 10 out of 10 points

The primary operating goal of a publicly-owned rm trying to best serve its stockholders should
be to:

Selected A.
Answer: Use a well-structured managerial compensation package to reduce con icts that
may exist between stockholders and managers.

Answers: A.
Use a well-structured managerial compensation package to reduce con icts that
may exist between stockholders and managers.

https://ntulearn.ntu.edu.sg/webapps/assessment/review/review.jsp?attempt_id=_6270039_1&course_id=_302588_1&content_id=_1680579_1&return_content=1&step= 1/3
20/08/2019 Review Test Submission: Lecture 1: Online Assignment – ...
Minimise the rm's risks because most stockholders dislike risk.
B. In turn, this will maximise the rm's stock price.

C.
Since it is impossible to measure a stock's intrinsic value, the text states that it is
better for managers to attempt to maximise the current stock price than its intrinsic
value.

D.
Maximise managers' own interests, which are by de nition consistent with
maximising shareholders' wealth.

E.
Maximise the rm's expected EPS, which must also maximise the rm's price per
share.

Question 4 10 out of 10 points

Which of the following statements is INCORRECT?

Selected A.
Answer: High and xed salaries can motivate managers to act in their shareholders’ best
interests.

Answers: A.
High and xed salaries can motivate managers to act in their shareholders’ best
interests.

B.
Managers should take actions to maximise the rm’s intrinsic value, not the stock
price in the short run.

C.
There are con icts of interests between managers and shareholders, and also
between shareholders and bondholders.

D.
In U.S., there is a tax disadvantage to setting up a corporation rather than a sole
proprietorship or partnership.

E. The threat of the rm being taken over motivates managers to work harder.

Question 5 0 out of 10 points

The primary operating goal of a publicly-owned rm interested in serving its stockholders

should be to:

Selected B.
Answer: Maximise the stock price per share over the long run, which is the stock's
intrinsic value.

Answers: A. Maximise shareholders’ wealth.

B.
Maximise the stock price per share over the long run, which is the stock's
intrinsic value.

C. Maximise the rm’s expected total cash ows.

D. Only (A) and (B) are correct.

E. All of the above statements, (A), (B) and (C), are correct.

Question 6 0 out of 10 points

Which one of the following actions by a nancial manager is most likely a form of agency
problem?

Selected B.
Answer: A nancial manager agrees to pay himself bonuses based on the market value of
the company’s stock rather than on the rm's level of sales.

Answers: A.
A nancial manager refuses to borrow money when such borrowings will create
losses for the rm.

https://ntulearn.ntu.edu.sg/webapps/assessment/review/review.jsp?attempt_id=_6270039_1&course_id=_302588_1&content_id=_1680579_1&return_content=1&step= 2/3
20/08/2019 Review Test Submission: Lecture 1: Online Assignment – ...
B.
A nancial manager agrees to pay himself bonuses based on the market value of
the company’s stock rather than on the rm's level of sales.

C.
A nancial manager agrees to cut research and development expenditures to boost
current pro ts when doing so will lower the market value of the rm's equity.

D.
A nancial manager refuses to lower product selling prices when such lowering of
prices will reduce the net pro ts of the rm.

E.
A nancial manager refuses to expand the company when expanding will lower the
market value of equity.

Tuesday, August 20, 2019 8:41:25 PM SGT

← OK

https://ntulearn.ntu.edu.sg/webapps/assessment/review/review.jsp?attempt_id=_6270039_1&course_id=_302588_1&content_id=_1680579_1&return_content=1&step= 3/3