fundamentals of corporate finance 11th canadian edition By Stephen A. Ross Test bank
A) Compensation based on the value of the stock.
B) Stock option plans.
C) Threat of a company takeover.
D) Threat of a proxy fight.
E) Compensation based only on cash without any incentive for performance.
199) When a corporation issues additional shares of common stock to the general public, they do so:
A) In the primary market.
B) Through a dealer in the secondary market.
C) Through a broker in the secondary market.
D) Only through the OTC market.
E) Only through the private markets.
200) A financial manager of a corporation is considering different operating strategies for the coming year. From a financial management standpoint, which of the following would be her optimal strategy?
A) Undertake the plan that would reduce the overall riskiness of the firm.
B) Undertake the plan that would maximize the current stock price.
C) Undertake the plan that would result in the largest profits for the year.
D) Undertake the plan that would maximize her personal wealth.
E) Undertake the plan that would lead to the most stable stock price for the year.
201) Which one of the following questions would most likely be the responsibility of the financial manager?
A) Which product markets should be expanded?
B) What price should be charged for a new product?
C) Which employees should work overtime?
D) How should the firm finance a new distribution center?
E) Where should a new store be located?
202) Which of the following is considered a "primary market" transaction?
A) You buy shares in the public offering of a start-up company in the computer industry.
B) Your mother sells you the shares she purchased in your uncle's latest business venture.
C) You buy shares in Apple from an online brokerage
D) You purchase call options issued by Ford Motor Company.
E) You purchase warrants issued by General Motors Corporation.
203) You are a shareholder in a corporation. The corporation earns $5 per share before taxes. After it has paid taxes, it will distribute the rest of its earnings to you as dividend. The corporate tax rate is 30% and your personal tax rate on dividend income is 25%. What is the amount of corporate tax?
A) $5.00
B) $3.50
C) $2.75
D) $1.50
E) $1.25
204) You are a shareholder in a corporation. The corporation earns $5 per share before taxes. After it has paid taxes, it will distribute the rest of its earnings to you as dividend. The corporate tax rate is 30% and your personal tax rate on dividend income is 25%. What is the amount of dividend?