The practice of monitoring company managers and aligning their incentives with shareholder goals is known as

A. corporate governance.

B. financial management.

C. agency theory.

D. fiduciary relationship.

Acme Builders is considering merging with Joe's Construction to achieve economies of scope sufficient to drive the combined firms' costs down by at least $500,000. Acme Builders has costs of $5,000,000 on sales of $8,000,000, and Joe's Construction has costs of $3,000,000 and sales of $5,000,000. What would be the minimum combined average cost of sales expressed as a percentage necessary to achieve the cost reduction goal?

A. 57.69 percent

B. 55.82 percent

C. 59 percent

D. 59.43 percent

Which of the following best explains why minimizing costs has potentially serious shortcomings as a means of maximizing owners' equity?

A. Spending lavishly can impress potential customers.

B. Without spending money on R&D to improve its products, a firm won't survive long in the constantly evolving economy.

C. Minimizing costs allows for the payment of larger dividends to company owners.

D. It's difficult to maximize market share without increasing spending.

If the current spot exchange rate is $0.9744 Canadian buys $1 U.S. and inflation is expected to be 1 percent over the next year in the United States with the Canadian inflation rate expected to be 5 percent over the same period, what would the exchange rate be at the end of the year using the relative form of the PPP equation?

A. $1.0234 Canadian

B. $0.9844 Canadian

C. $0.9373 Canadian

D. $0.9922 Canadian

Why do fiduciary relationships create ethical dilemmas for financial professionals?

A. Financial management requires them to analyze investments.

B. They're regulated by the government.

C. They manage other people's money.

D. They're subject to monitoring by their firms.

You plan to go on a trip to Europe and want to have 4,000 euros available to spend on the trip. Using the currency rates found in this table, how many U.S. dollars will you need to convert to euros?

A. $4,935

B. $5,184

C. $5,216

D. $4,832