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1. u05q1 Question 1

(Points: 4)

Question: Which factor is not considered when determining a form of business organization? a. Who owns the firm. b. The owners' risks. c. The tax ramifications. d. The physical location of the business.

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2. u05q1 Question 2

(Points: 4)

What should a firm

Which factor is not considered when determining a form of business organization? Who owns the firm. The owners' risks. The tax ramifications. The physical location of the business. What should a firm's primary objective be, given that it might actually be the most beneficial for society in the long run? Minimizing layoffs. Maximizing market share. Minimizing costs. Maximizing shareholder value. What is the definition of the term agency problem? The difficulties that arise in professional baseball when players become free agents. The difficulties that arise when a principle hires an agency to represent their company. The difficulties that arise when a principle hires an agent and cannot fully monitor the agent's actions. When a principle hires an agent and must monitor every move they make, because they have found the agent to be unethical. A particular security's default risk premium is 3 percent. For all securities, the inflation risk premium is 1.75 percent and the real interest rate is 4.2 percent. The security's liquidity risk premium is 0.35 percent and the maturity risk premium is 0.95 percent. The security has no special covenants. What is the security's equilibrium rate of return? 8.50 percent. 6.05 percent. 10.25 percent. 9.90 percent. Which of the following statements is correct? An IPO is an example of a primary market transaction. Money markets are subject to wider price fluctuations and are therefore more risky than capital market instruments. A direct transfer of funds is more efficient than using financial institutions. The market segmentation theory argues that different investors have different risk preferences, which determine the shape of the yield curve. Which of the following transactions in NOT a secondary market transaction? GE sells $30 million of new preferred stock. Microsoft sells $2 million of IBM preferred stock out of its marketable securities portfolio. The Magellan Fund buys $100 million of Apple previously issued bonds. Allstate Insurance Company. Sells $5 million in IBM bonds