Podcast
Questions and Answers
What is the main concern of shareholders regarding higher short-term profits?
What is the main concern of shareholders regarding higher short-term profits?
- The company's reputation may be affected
- Long-term profits may be damaged (correct)
- Shareholders may not receive immediate dividends
- Short-term profits may not be sustainable
What is the hurdle rate or cost of capital?
What is the hurdle rate or cost of capital?
- The average rate of return on investment
- The maximum rate of return on investment
- The rate of return on investment without risk
- The minimum acceptable rate of return on investment (correct)
What is the main criticism of shareholder value maximization?
What is the main criticism of shareholder value maximization?
- Long-termism and externalities
- Short-termism and internalities
- Short-termism and externalities (correct)
- Long-termism and internalities
What is the difference between a shareholder and a stakeholder?
What is the difference between a shareholder and a stakeholder?
What is the primary objective of corporate finance?
What is the primary objective of corporate finance?
What is the agency problem in the context of agency theory?
What is the agency problem in the context of agency theory?
What is the opportunity cost of capital used for in corporate finance?
What is the opportunity cost of capital used for in corporate finance?
What determines the current wealth of shareholders?
What determines the current wealth of shareholders?
What is the difference between tangible and intangible assets?
What is the difference between tangible and intangible assets?
What is the primary focus of investment decisions in corporate finance?
What is the primary focus of investment decisions in corporate finance?
Why is a safe dollar worth more than a risky dollar?
Why is a safe dollar worth more than a risky dollar?
What is the purpose of good governance in corporate finance?
What is the purpose of good governance in corporate finance?
What is a major problem with senior executives in companies?
What is a major problem with senior executives in companies?
What is the main purpose of corporate governance?
What is the main purpose of corporate governance?
What is an example of a corporate governance mechanism?
What is an example of a corporate governance mechanism?
How is the rate of return calculated?
How is the rate of return calculated?
Why is a higher rate of return not always better?
Why is a higher rate of return not always better?
What determines value in financial markets?
What determines value in financial markets?
What is the key weakness of the agency problem?
What is the key weakness of the agency problem?
Why may few shareholders have a strong incentive to monitor management?
Why may few shareholders have a strong incentive to monitor management?
What is an example of how managers may allow themselves to enjoy expensive benefits at the expense of investors?
What is an example of how managers may allow themselves to enjoy expensive benefits at the expense of investors?
What is a consequence of managers' ability to exercise substantial discretion over the disposition and allocation of investors' capital?
What is a consequence of managers' ability to exercise substantial discretion over the disposition and allocation of investors' capital?
What is an example of how managers may waste investors' funds?
What is an example of how managers may waste investors' funds?
What is the implication of the statement 'Indeed, the very profits that many of the companies reported appear to have been the product more of auditors' imaginations than of any CEO's strategy for seizing or creating value'?
What is the implication of the statement 'Indeed, the very profits that many of the companies reported appear to have been the product more of auditors' imaginations than of any CEO's strategy for seizing or creating value'?
What is the concept that suggests identical assets should have the same value?
What is the concept that suggests identical assets should have the same value?
According to the capital asset pricing model, how do investors reduce or eliminate some risks?
According to the capital asset pricing model, how do investors reduce or eliminate some risks?
What is a key factor that affects the choice between debt and equity financing?
What is a key factor that affects the choice between debt and equity financing?
What is the primary focus of Chapters 6 and 9 in the context of corporate finance?
What is the primary focus of Chapters 6 and 9 in the context of corporate finance?
In a perfect financial market, what is the significance of the choice between debt and equity financing?
In a perfect financial market, what is the significance of the choice between debt and equity financing?
