A$.$ TRUE $/$ FALSE QUESTIONS

Write either "True" or "False" on the blank preceding each question.

Agency conflicts most typically occur whenever business owners act on their own behalf when making decisions for the firm.

Creditors, such as a bank, lend funds to a firm based on the firm's perceived risk at the time the credit is extended.

If the self$-$interest of the firm's managers is not aligned with the interests of the firm's shareholders, then the value of the firm likely will not be maximized.

A corporation's Board of Directors is elected by the corporation's upper$-$level executive team to act on behalf of the executive team.

It is quite rare for a corporation's Chief Executive Officer $($CEO$)$ to also serve as the Chairman of the Board of Directors for the corporation for which he works.

"Capital components" are sources of funding for a firm that come from investors.

In general, it is best if the "weights" in the "Weighted Average Cost of Capital" $($WACC$)$ formula are based on the market values or the target values of the various capital components, rather than on their historical book values.

A corporation benefits by issuing new preferred stock as a source of financing, as dividends paid on preferred stock are tax$-$deductible to the firm.