Attached

Shareholders agree on maximizing shareholder wealth as the common objective of the firm: a. Only if they have the same preferred time pattern of consumption b. When they have free access to competitive financial markets c. When they have the same preferences towards risk During the last thirty years, the average CEO compensation in the form of bonuses and stock-based incentives, as a percentage of total compensation, has: a. Stayed roughly constant b. Decreased c. Increased If the management of the firm adopts policies that protect the environment with the intention of making their products more attractive for consumers: a. They are acting in line with the stakeholder view b. They are acting in line with both the stakeholder view and the shareholder view c. They are acting in line with the shareholder view If the NPV is an increasing function of r then: a. We should accept the project if the IRR is below r b. The IRR is completely useless c. We should accept the project if the IRR is above r An investment project has two IRRs, 2% and 23%: a. We should invest in the project if the NPV function is a hump-shaped function of r and the opportunity cost of capital falls between 2% and 23% b. We should invest in the project if the NPV function is a U-shaped function of r and the opportunity cost of capital falls between 2% and 23% c. We should invest in the project if the opportunity cost of capital is greater than 2% . The option to wait adds more value to a project a. the higher the discount rate b. the higher the losses we avoid with the extra information c. the higher the gains when we undertake the project Project A has cash ows -8M, 4M, 5M in years 0, 1 and 2 respectively, and project B has cash flows -8M, 4M, 0M, 6M in years 0, 1, 2 and 3 respectively. The cost of capital is 10% and the cutoff period is 2 years. a. The payback rule would choose project B b. The NPV rule would choose project B because its NPV is 0.38M higher c. The discounted payback rule would choose project B d. The NPV rule would choose project B because its NPV is 0.18M higher