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BUSI 2504 Midterm S13.docx

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BUSI 2504
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Midterm ExaminationBUSI2504Name IDDURATION20 HOURSNo examination aids other than calculators are permittedUse or possession of unauthorized materials will automatically result in the award of a zero grade for this examinationStudents MUST count the number of pages in this examination question paper before beginning to write and report any discrepancyThis exam paper has 12 pages and has 39 questions Use your Scantron sheets to Answer ALL questions on the exam paper There are 38 marks to be awarded worth 30 of your final gradeThis examination question paper may not be taken from the examination room1This exam is version 1 please indicate which exam you are writing on the Scantron for your answer to Q1 in order to be graded appropriatelyaVersion 1bVersion 2cVersion 3dVersion 42Which of the following are agency costsIforegoing an investment opportunity which would add to the market value of the owners equityIIpaying a dividend to each of the existing shareholdersIIIpurchasing new equipment which increases the value of each share of stockIVhiring outside auditors to verify the accuracy of the company financial statements A II and III only B I and III only C I and IV only D II and IV only E I II and IV only3The Board of Directors of Beeline Inchave decided to base the salary of its financial manager entirely upon the market share of the firmAccordinglyathe firm may incur some agency costs since the manager will be focused on the market share of the firm rather than acting to maximize earningsbthe financial manager will always act in the best interest of the shareholders since all agency costs have been eliminated through salary incentiveschis arrangement may be unnecessary since the goal of the firm is to maximize earnings for shareholders and that is most likely accomplished through larger market sharedthe manager may not act to maximize the current value of the firms stock resulting in agency costs for the firms stockholdersethe firm will incur some agency costs if the manager acts to maximize market share4Acan lose at most what she has already invested in a firmI common stockholderII limited partnerIII general partnerIV sole proprietoraI onlybI and II onlycI II and IV onlydII III and IV onlyeII and III only
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