Multinational Business Finance Testbank chapter213eEiteman.docx
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MultinationalBusinessFinanceTestbankchapter213eEiteman
MultinationalBusinessFinance,13e（Eiteman/Stonehill/Moffett）
Chapter2CorporateOwnership,Goals,andGovernance
2.1WhoOwnstheBusiness?
MultipleChoice
1）Foreignstockmarketsarefrequentlycharacterizedbycontrollingshareholdersfortheindividualpubliclytradedfirms.WhichofthefollowingisNOTidentifiedbytheauthorsastypicalcontrollingshareholders?
A）thegovernment（forexample,privatizedutilities）
B）institutions（suchasbanksinGermany）
C）family（suchasinFrance）
D）Alloftheabovewereidentifiedbytheauthorsascontrollingshareholders.
Answer:
D
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
2）WhichofthefollowingisNOTtypicallyassociatedwiththepublicownershipofbusinessorganizations?
A）thestate
B）thegovernment
C）families
D）civilsociety
Answer:
C
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
3）WhichofthefollowingisNOTtypicallyassociatedwiththeprivateownershipofbusinessorganizations?
A）thegovernment
B）families
C）individuals
D）publiclytraded,widely-heldorganizations
Answer:
A
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
4）StateOwnedEnterprises（SOEs）:
A）areaformofpublicownership.
B）arecreatedforcommercialactivitiesratherthancivilorsocialactivities.
C）arethedominantformofbusinessorganizationinsomecountries.
D）arealloftheabove.
Answer:
D
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
5）Theproblemsthatmayariseduetotheseparationofownershipandmanagementinlargebusinessorganizationsisknowas:
A）separationanxiety.
B）theagencyproblem.
C）corporatedisconnecttheory.
D）noneoftheabove
Answer:
B
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Conceptual
6）Privatizationisatermusedtodescribe:
A）firmsthatarepurchasedbythegovernment.
B）governmentoperationsthatarepurchasedbycorporationsandotherinvestors.
C）firmsthatdonotusepubliclyavailabledebt.
D）non-publicmeetingsheldbymembersofinterlockingdirectorates.
Answer:
B
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
True/False
1）IntheU.S.andU.K.stockmarketsarecharacterizedbyownershipoffirmsconcentratedinthehandsofafewcontrollingshareholders.Incontrast,therestoftheworldtendstohavemorewidespreadownershipofshares.
Answer:
FALSE
Comment:
Justtheoppositeistrue.IntheU.S.andU.K.ownershipismorewidespreadthanintherestoftheworld,andmanagementtendstoownonlyasmallportionofthefirm.
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
2）StateOwnedEnterprises（SOEs）bytheirverynamecannotbetradedonstockexchangesbecausetheyaregovernmentowned.
Answer:
FALSE
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Conceptual
3）Inrecentyearsthetrendhasbeenformarketstoincreasingfocusontheshareholderwealthformofwealthmaximization.
Answer:
TRUE
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
4）Non-Anglo-Americanmarketsaredominatedbythe"one-vote-one-share"rule.
Answer:
FALSE
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
5）Accordingtorecentresearch,family-ownedfirmsinsomehighly-developedeconomiestypicallyoutperformpublicly-ownedfirms.
Answer:
TRUE
Diff:
1
Topic:
2.1WhoOwnstheBusiness?
Skill:
Recognition
Essay/ShortAnswer
1）Whatarethemostimportantdistinctionsthatmakestateownedenterprises（SOEs）differentfromotherformsofgovernmentorganizations?
Answer:
Stateownedenterprisesarecreateddistinctlyforthepurposeofcommercialactivities,ratherthanthemultitudeofothersocial,civil,andregulatoryactivitiesofgovernment.SOEsaretoday,inmanycountries,thedominantformofbusinessentity.
Diff:
2
Topic:
2.1WhoOwnstheBusiness?
Skill:
Conceptual
2.2TheGoalofManagement
MultipleChoice
1）"Maximizecorporatewealth":
A）istheprimaryobjectiveofthenon-Anglo-Americanmodelofmanagement.
B）asamanagementobjectivetreatsshareholdersonaparwithothercorporatestakeholderssuchascreditors,labor,andlocalcommunity.
C）hasabroaderdefinitionthanjustfinancialwealth.
D）alloftheabove
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
2）TheShareholderWealthMaximizationModel（SWM）:
A）combinestheinterestsandinputsofshareholders,creditors,management,employees,andsociety.
B）isbeingusurpedbytheStakeholderCapitalismModelasthosetypesofMNEsdominatetheirglobalindustrysegments.
C）clearlyplacesshareholdersastheprimarystakeholder.
D）isthedominantformofcorporatemanagementintheEuropean-Japanesegovernancesystem.
Answer:
C
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
3）TheStakeholderCapitalismModel（SCM）:
A）clearlyplacesshareholdersastheprimarystakeholder.
B）combinestheinterestsandinputsofshareholders,creditors,management,employees,andsociety.
C）hasfinancialprofitasitsgoalandisoftentermedimpatientcapital.
D）istheAnglo-Americanmodelofcorporategovernance.
Answer:
B
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
4）IntheAnglo-Americanmodelofcorporategovernance,theprimarygoalofmanagementisto:
A）maximizethewealthofallstakeholders.
B）maximizeshareholderwealth.
C）minimizecosts.
D）minimizerisk.
Answer:
B
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
5）Infinance,anefficientmarketisoneinwhich:
A）pricesareassumedtobecorrect.
B）pricesadjustquicklyandaccuratelytonewinformation.
C）pricesarethebestallocatorsofcapitalinthemacroeconomy.
D）alloftheabove
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
6）Systematicriskcanbedefinedas:
A）thetotalrisktothefirm.
B）theriskoftheindividualsecurity.
C）theriskofthemarketingeneral.
D）theriskthatcanbesystematicallydiversifiedaway.
Answer:
C
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
7）Unsystematicriskcanbedefinedas:
A）thetotalrisktothefirm.
B）theriskoftheindividualsecurity.
C）theaddedriskthatafirm'ssharesbringtoadiversifiedportfolio.
D）theriskofthemarketingeneral.
Answer:
B
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
8）Thestudyofhowshareholderscanmotivatemanagementtoaccepttheprescriptionsoftheshareholderwealthmaximizationmodeliscalled:
A）marketefficiency.
B）theSWMmodel.
C）agencytheory.
D）theSCMmodel.
Answer:
C
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Recognition
9）UndertheShareholderWealthMaximizationModel（SWM）ofcorporategovernance,poorfirmperformanceislikelytobefacedwithallbutwhichofthefollowing?
A）saleofsharesbydisgruntledcurrentshareholders
B）shareholderactivismtoattemptachangeincurrentmanagement
C）asamaximumthreat,initiationofacorporatetakeover
D）prisontimeforexecutivemanagement
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
10）WhichofthefollowingisareasonwhymanagersacttomaximizeshareholderwealthinAnglo-Americanmarkets?
A）theuseofstockoptionstoalignthegoalsofshareholdersandmanagers
B）themarketforcorporatecontrolthatallowsforoutsidetakeoverofthefirm
C）performancebasedcompensationforexecutivemanagement
D）alloftheabove
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
11）WhichofthefollowingisNOTtrueregardingthestakeholdercapitalismmodel?
A）Banksandotherfinancialinstitutionsarelessimportantcreditorsthansecuritiesmarkets.
B）LaborunionsaremorepowerfulthanintheAnglo-Americanmarkets.
C）Governmentsinterferemoreinthemarketplacetoprotectimportantstakeholdergroups.
D）AlloftheaboveareTRUE.
Answer:
A
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
12）Thestakeholdercapitalismmodel:
A）typicallyavoidstheflawofimpatientcapital.
B）triestomeetthedesiresofmultiplestakeholders.
C）mayleavemanagementwithoutaclearsignalabouttradeoffsamongtheseveralstakeholders.
D）alloftheabove
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
13）WhichofthefollowingisgenerallyNOTconsideredtobeaviableoperationalgoalforafirm?
A）maintainingastronglocalcurrency
B）maximizationofafter-taxincome
C）minimizationofthefirm'seffectiveglobaltaxburden
D）correctpositioningofthefirm'sincome,cashflowsandavailablefundsastocountryandcurrency
Answer:
A
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
14）Whichofthefollowingoperationalgoalsfortheinternationalfirmmaybeincompatiblewiththeothers?
A）maintainingastronglocalcurrency
B）maximizationofafter-taxincome
C）minimizationofthefirm'seffectiveglobaltaxburden
D）Eachofthesegoalsmaybeincompatiblewithoneormoreoftheothers.
Answer:
D
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
15）Theprimaryoperationalgoalforthefirmisto:
A）maximizeafter-taxprofitsineachcountrywherethefirmisoperating.
B）minimizethetotalfinancialrisktothefirm.
C）maximizetheconsolidatedafter-taxprofitsofthefirm.
D）maximizethetotalrisktothefirm.
Answer:
C
Diff:
1
Topic:
2.2TheGoalofManagement
Skill:
Conceptual
16）WhichofthefollowingbroadtopicsisNOTidentifiedasanareatobeestablishedasgoodcorporategovernancepracticebytheOrganizationforEconomicCooperationandDevelopment（OECD）?
A）protecttherightsofshareholders
B）disclosureandtransparency
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