Which of the following is the best example of an agency problem

141.Which one of the following actions is the best example of an agency problem?A.Requiring stockholders approval of all management compensation decisionsB.Paying management bonuses based on the number of store locations opened during the yearC.Basing management bonuses on the attainment of specific financial goalsD.Paying management bonuses based on the current market value of the firm's stockE.Accepting a project that enhances both management salaries and the market value of the firm'sstockLO4: Agency ProblemLevel: ChallengeRoss - Chapter 001 #141Type: Concepts142.Which one of the following means of management compensation is designed to help eliminate theagency problem?A.Increasing health care benefitsB.Offering stock optionsC.Providing a corporate jetD.Providing cost of living adjustmentsE.Providing annual raisesLO4: Agency ProblemLevel: IntermediateRoss - Chapter 001 #142Type: Concepts143.The primary purpose of an auction market is to:A.Handle private placements of shares of stock.B.Provide a market place for dealers.C.Match buyers with sellers.D.Provide electronic trading for dealers.E.Offer new shares of stock to the general public.LO5: Auction MarketLevel: IntermediateRoss - Chapter 001 #143Type: Concepts144.The primary purpose of capital budgeting is to:A.Estimate the initial cost of a project.B.Determine the risk level of a project.C.Determine the amount of cash and inventory to keep on hand.D.Identify projects that produce cash flows that exceed the cost of the project.E.Distinguish projects that have at least a five-year life from those that don't.LO1: Capital BudgetingLevel: BasicRoss - Chapter 001 #144Type: Concepts

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Economics: A Contemporary Introduction

McEachern

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145.An individual who places an order to buy 1000 shares of IBM stock:A.Is involved in a private placement of securities.B.Must have hired a dealer to perform this transaction.C.Is most likely involved in an IPO.D.Has to be listed as a private dealer.E.Is most likely participating in the secondary market.LO5: Secondary MarketLevel: IntermediateRoss - Chapter 001 #145Type: Concepts146.Stockholders elect:A.All senior managers.B.The President.C.The Chairman of the Board.D.The Corporate Directors.E.The Chief Executive Officer.LO2: Organizational ChartLevel: BasicRoss - Chapter 001 #146Type: Concepts147.Which one of the following questions would most likely be the responsibility of the financialmanager?A.Where should a new store be located?B.What price should be charged for a new product?C.How should the firm finance a new distribution center?D.Which product markets should be expanded?E.Which employees should work overtime?LO1: Financial ManagementLevel: BasicRoss - Chapter 001 #147Type: Concepts

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Economics: A Contemporary Introduction

McEachern

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Which of the following is the best example of agency problem?

Which are examples of the agency problem?

Which of the following is not an example of an agency problem?

What are the three agency problems?