Which of the following statements is true?
A) Shareholders as a group have little or no ability to force managers to pursue maximization of the firm's value.
B) The effectiveness of a board of directors in monitoring managers will be enhanced by appointing members from the firm who are well-informed about the management problems facing the firm.
C) Reducing the amount of debt financing can reduce the divergence between the shareholders' interests and the owner's interests.
D) Equity ownership by managers is thought to be one of the most effective corporate control mechanisms.
E) All of the above are true.
Correct Answer:
Verified
Q3: value of a firm is
A)smaller the higher
Q4: In a perfectly competitive market,
A) all firms
Q5: Economic profit is
A) the difference between total
Q6: A price-setting firm
A) can lower the price
Q7: A risk premium is
A) a measure calculated
Q8: Economic profit
A) is a theoretical measure of
Q10: The principal-agent problem arises when
A) the principal
Q11: Moral hazard
A) occurs when managers pursue maximization
Q12: When economic profit is positive,
A) total revenue
Q14: When a firm is a price-taking firm,
A)
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