The overall goal of capital budgeting projects should be to:

		increase the firm's sales.
		increase the firm's outstanding shares of stock.
		increase the wealth of the firm's shareholders.
		decrease the firm's reliance upon debt.

Which of the following is least likely to represent an agency problem?

		lavish spending on expense accounts.
		executive incentive compensation plans.
		plush remodeling of the executive suite.
		excessive investment in "safe" projects.

The R&M Bank has offered you the choice between two investment accounts:

#1 pays interest at a rate of 12% compounded semi-annually

#2 pays interest at a rate of 11% compounded monthly

Which investment account do you prefer and why?

		#2, highest effective rate
		#1, 12% is greater than 11%
		#2, greater compounding frequency
		#1, highest effective rate

Financial markets and intermediaries:

		prevent the transportation of cash across time.
		increase risks for businesses.
		generally reduce the liquidity of securities.
		channel savings to real investment.