Which that the complying with actions are most likely to mitigate the agency problem between stockholders and managers?
A manager receives a lower salary but receives added shares the the company"s stock.The plank of directors has actually become more vigilant in its oversight of the company"s management
Which that the following is most likely to encourage a firm"s supervisors to make decisions that space in the ideal interest the shareholders?
Executive compensation comes generally in the type of share options.Institutional investors such as mutual funds and also pension funds hold big amounts of the firm"s stock.
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The future value of a lump sum at the finish of five years is $1,000. The in the name interest rate is 10% and interest is compounded semiannually. I beg your pardon of the following statements is many correct?
You room interested in investing your money in a bank account. I beg your pardon of the following banks provide you through the highest efficient rate of interest?
Frank Lewis has a 30-year, $100,000 mortgage v a in the name interest rate of 10% and also monthly compounding. Which of the following statements concerning his mortgage is most correct?
The relationship of the monthly payment the represents interest will certainly be reduced for the last payment than for the first payment ~ above the loan.The total dollar amount of principal being paid off each month gets bigger as the loan viewpoints maturity.
Suppose someone offered you the choice of 2 equally risky annuities, every paying $10,000 every year for 5 years. One is an plain annuity, the other is an annuity due. Which of the following statements is many correct?
The present value the the annuity due exceeds the existing value that the ordinary annuity, and also the future value of the annuity due also exceeds the future value of the simple annuity.
You freshly sold 100 share of Microsoft stock to her brother at a family reunion. At the reunion her brother gave you a inspect for the stock and also you offered your brothers the stock certificates. Which of the following ideal describes this transaction?
Investors can outperform the sector if castle have access to information that has actually not yet been publicly revealed.
One of the simple relationships in interest rate theory is that, other things organized constant, because that a given readjust in the compelled rate that return, the ____ the moment to maturity, the ___ the adjust in price.
Assume that a 10-year Treasury bond has actually a 12 percent annual coupon, when a 15-year Treasury bond has actually an 8 percent annual coupon. The productivity curve is flat; every Treasury securities have a 10 percent yield to maturity. I beg your pardon of the adhering to statements is most correct?
If interest rates decline, the price that both bonds will increase, yet the 15-year link will have actually a larger percentage rise in price.
All rather equal, permanent bonds have an ext interet price risk than temporary bonds.All rather equal, high-coupon bonds have an ext reinvestment price risk 보다 low-coupon bonds.All rather equal, momentary bonds have an ext reinvestment price risk than perform long-term bonds.
All the the following may serve to mitigate the coupon price that would otherwise be required on a link issued in ~ par except a,
You room considering two Treasury bonds. Shortcut A had actually a 9% annual coupon, and also Bond B has a 6% yearly coupon. Both bonds have a yield to maturity that 7%. Assume the the productivity to maturity is expect to remain at 7%. I beg your pardon of the following statements is many correct?
If the productivity to maturity stays at 7%, the price of bond A will certainly decrease end time, yet the price of shortcut B will increase over time.
A 10-year bond has actually a 10 percent yearly coupon and a yield to maturity of 12 percent. The bond can be referred to as in 5 years at a call price of $1,050 and also the bond"s challenge value is $1,000. I m sorry of the following statements is many correct?
Which the the following statements is many correct? (Assume the the risk-free rate remains constant.)
If the industry risk premium boost by 1 percentage point, climate the compelled return will increase by 1 percentage suggest for a stock that has actually a beta equal to 1.0.
Which the the adhering to statements finest describes what would certainly be meant to occur as friend randomly include stocks to your portfolio?
Market participants room able to remove virtually all company-specific threat if they organize a huge diversified portfolio of stocks.It is feasible to have actually a case where the market risk the a single stock is much less than that of a well diversified portfolio.
For the foreseeable future, the real risk-free price of interst, k*, is supposed to continue to be at 3 percent. Inflation is meant to steadily increase over time. The maturity danger premium equals 0.1(t-1)%, wherein t to represent the bond"s maturity. On the communication of this information, i beg your pardon of the following statements is most correct?
The productivity on 10-year Treasury securities should exceed the yield on 2-year Treasury securities. The yield on 10-year this firm bonds need to exceed the productivity on 8-year Treasury securities.
Companies see boost in your production avenues that leads to rise in the need for funds.There is rise in expected inflation.
Assume that the expectation theory defines the term structure of attention rates. I beg your pardon of the following statements is many correct?
Assume that the expectations concept holds. I beg your pardon of the adhering to statements about Treasury bill prices is many correct? (2-year rates apply to binding that will mature in two years, 3-year rates apply to bonds that will certainly mature in 3 years, and so on).
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When calculating the cost of debt, a agency needs to adjust for taxes, due to the fact that interest payments space tax deductible.
Wyden Brothers has no preserved earnings. The company uses the CAPM to calculate the price of equity capital. The company"s funding structure consists of usual stock, preferred stock, and debt. I beg your pardon of the following events will minimize the company"s WACC?