Finance Quiz

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Finance → Finance Quiz from 11 to 15

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11. Generally, a corporation is owned by the
I. Managers
II. Board of Directors
III. Stock holders
IV. stake holders
(A) II only
(B) I and II
(C) III only
(D) III and IV

12. A firm’s investment decision is also called the
(A) financing decision
(B) capital budgeting decision
(C) liquidity decision
(D) none of these

13. Conflicts between shareholders and managers’ interest is called
(A) management problem
(B) area of the board of directors
(C) risk
(D) agency problem

14. In the principle-agent framework
(A) managers are the principals
(B) directors are the principals
(C) shareholders are the principals
(D) shareholders are the agents

15. The risk that can be eliminated by diversification is called
(A) specific risk
(B) security risk
(C) market risk
(D) beta

ANSWERS: FINANCE QUIZ
11. (C) III only
12. (B) capital budgeting decision
13. (D) agency problem
14. (C) shareholders are the principals
15. (A) specific risk