The principal-agent problem in corporate finance

Assignment Help Finance Basics
Reference no: EM13703298

Question 1

Which of the following does not mitigate the principal-agent problem in corporate Finance;

a) electing the eco as a chairman of the board directors
b-tying managerial compensation to the firm's long-term stock price
c-The influence of large shareholders
d-the threat of hostile takeovers
e-increasing proportion of the CEO's that comes from salary and deceasing the proportion that comes from stock option

Question 2

Billy bob holds two bonds with equal sized coupons and equal maturities. Bond A is a tresurary bond and bond B is a corporate bond. Which statement is most correct :

A) Bond A has a higher liquidity premium and therefore sells at higher prie
B) Bond A has lower default risk premium and therefore sells at a lower price
C) Bond B has a higher default risk premium and therefore sells at a lower price
D) Bond B has a higher liquidity premium and therefore sells at a higher price
E) Bond A and B have the same maturities and coupons and will therefore sell at the same price

Reference no: EM13703298

Questions Cloud

Estimate the fundamental frequency : Using 340 m/s for the speed of sound in air, calculate the fundamental frequency for a 5 m organ pipe with the following characteristics
Find the average force that a baseball pitcher hand exerts : Estimate the average force that a baseball pitcher's hand exerts on a 0.145-kg baseball as he throws a 36-m/s pitch
What is the company''s cost of equity : 1.The Miller Co. just issued a dividend of $2.75 per share on its common stock. The company is expected to maintain a constant 5.8 percent growth rate in its dividends indefinitely. If the stock sells for $59 a share, what is the company's cost..
What is the company''s cost of equity : 1.The Miller Co. just issued a dividend of $2.75 per share on its common stock. The company is expected to maintain a constant 5.8 percent growth rate in its dividends indefinitely. If the stock sells for $59 a share, what is the company's cost..
The principal-agent problem in corporate finance : Which of the following does not mitigate the principal-agent problem in corporate Financea) electing the eco as a chairman of the board directors b)-tying managerial compensation to the firm's long-term stock price
Evaluation of corporate performance : The Final Paper will involve applying the concepts learned in class to an analysis of a company using data from its annual report. Using the concepts from this course, you will analyze the strengths and weaknesses of the company and write a re..
Ethical issue or situation relating to a current : Prepare an 11- to 15-page paper that assesses a legal/ethical issue or situation relating to a current, previous, or potential future work environment. Use at least 10 scholarly sources that are suitable for research in a graduate-level course...
Increase income and reduce expenses : Increase income and reduce expenses, both ANZ and Westpac will continue to progress in a positive way and work hard toward their finances. To elaborate this, increasing the spread and reducing the burdens will overall direct the banks performan..
Doctors without borders : My brand is "doctors without borders." Using the references you have found to learn about your chosen brand, write a 1,300 word APA style essay providing the following information without a cover page. Based on your examination, does your bran..

Reviews

Write a Review

Finance Basics Questions & Answers

  Firm a has 10000 in assets entirely financed with equity

nbsp1. firm a has 10000 in assets entirely financed with equity. firm b also has 10000 in assets but these assets are

  Calculate degree of combined leverage

Which of the following is a correct way to calculate degree of combined leverage?

  What will your monthly payments be

You have arranged to finance the remainder with a 30-year, monthly payment, amortized mortgage at a 6.5% nominal interest rate, with the first payment due in one month. What will your monthly payments be?

  Calculate expected rates of return on the stocks

Calculate expected rates of return on the following stocks. The risk-free interest rate is 7%. "a. A stock whose return is uncorrelated with all three f

  Mergers and acquisitions has become part of the corporate

backgroundmergers and acquisitions has become part of the corporate financing world. every day wall street investment

  Which one of the following is a direct bankruptcy cost

Which one of the following is a direct bankruptcy cost?

  How many years is it until this bond matures

The Lo Sun Corporation offers a 7 percent bond with a current market price of $873.35. The yield to maturity is 8.34 percent. The face value is $1,000. Interest is paid semiannually. How many years is it until this bond matures?

  The local fitness store allows customers to choose their

the local fitness store allows customers to choose their payment plan when they purchase exercise equipment. for the

  Partnership business structure over a corporation

Make an argument for using a partnership business structure over a corporation. Provide support for your argument.

  Find the amount needed for living expenses

A family spends dollar 34,000 a year for living expenses. If prices increase by 4% a year for the next 3 years, what amount will the family need for their living expenses after 3 years?

  Discussion typical reasoning

Discussion Typical Reasoning

  Explaining and comparing mutually exclusive projects

Explaining and Comparing Mutually Exclusive projects and Eads Industrial System Company is trying to decide between two different conveyor belt systems

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd