1. The primary goal of a financial manager should be to a. minimize operating costs b. minimize interest payments c. minimize tax payments d. maximize operating income each year e. maximize the value of the firm's stock 2. Relaxant Inc. operates as a partnership. Now the partners have decided to convert the business into a corporation. Which of the following statements is CORRECT? a. Relaxant's shareholders (the ex-partners) will now be exposed to more liability disclosures income taxes. difficult to transfer their ownership growth. b. The company will probably be subject to fewer regulations and required c. Assuming the firm is profitable, none of its income will be subject to federal d. The firm's investors will be exposed to less liability, and they will find it less e. The firm will find it more difficult to raise additional capital to support its 3. Which of the following actions would be most likely to reduce potential conflicts of interest between stockholders and managers? a. Increase the proportion of executive compensation that comes from stoc b. Change the corporation's formal documents to make it more difficult for options and decrease the proportion that is paid as cash salaries outside investors to acquire a controlling interest in the firm through a hostile takeover. The percentage of the firm's stock that is held by institutional investors such as mutual funds, pension funds, and hedge funds rather than by small individual investors changes from 70% to 20%. For a firm that compensates managers with stock options, decrease the time before options are vested, i.e, the time before options can be exercised and the shares that are received can be sold. All of the above. c. d. e