Hi.

Choose the best answer. State your explanation.

46) An increase in the market price of a company's common stock will immediately affect its:

A) Stock return.

B) Debt to equity ratio.

C) Earnings per share.

D) Economic value added.

E) Return on equity.

47) Compensation plans for high-level managers and executives are usually explained in the firm's:

A) Management Discussion and Analysis (MD&A).

B) Income Statement.

C) Notes to the Financial Statements.

D) Proxy Statement.

48) In service firms, financial results can be measured by all ofthe following except:

A) Staff utilization.

B) The profit multiplier.

C) Collections of accounts.

D) Throughput.

49) Which of the following would not play a strategic role in management compensation?

A) Ethical issues.

B) Strategic conditions facing the firm.

C) The effect of a change in financial reporting method.

D) The effect of risk aversion on managers' decision making.

50) Which one of the following has been the most common payment option for bonus compensation in recent years?

A) Vacation time.

B) Stock options.

C) Increased benefits.

D) Salary increase.

51) Common bases of bonus compensation include:

Choice

Stock

price

Balanced

scorecard

Strategic

performance

measure

A.

No

No

Yes

B.

Yes

Yes

Yes

C.

Yes

No

No

D.

Yes

Yes

No

E.

No

Yes

Yes

A) Option A

B) Option B

C) Option C

D) Option D

E) Option E

52) Which of the following would explain why a manager would elect to defer bonus compensation to future years?

A) Interest rates are expected to decrease.

B) The firm will be issuing an initial public offering in the near future.

C) To show dedication to the company.

D) To avoid or defer taxes.

53) Firms typically provide benefits (perks) to employees to enhance motivation. Which of the following would not be an example of a perk?

A) Company car.

B) Country club membership.

C) Stock options.

D) Executive life insurance.

54) The commonly used approaches for business valuation include:

Financial

Analysis

Profitability

& Efficiency

Analysis

Discounted

Cash Flow

A)

Yes

Yes

No

B)

Yes

No

No

C)

No

Yes

Yes

D)

No

No

Yes

E)

Yes

No

Yes

A) Option A

B) Option B

C) Option C

D) Option D

E) Option E

55) Which of the following is a liquidity ratio?

A) Gross margin ratio.

B) Return on Assets ratio.

C) Quick ratio.

D) Earnings per share.

-ca