Chapter 5

1. A public authority responsible for implementing autonomous authority over some area of
corporate activity in a regulatory or supervisory capacity.

A. Competitors

B. Watchdogs

C. Regulatory Agencies

D. Financiers

2. A corporations that are always on the watch and waiting for a chance to take-over a
certain company, be it via friendly or hostile takeover.

A. Watchdogs

B. Competitors

C. Predator Companies

D. Regulatory Agencies

3. They have the capability to operate in their own self-interest rather than in the best
interest of the firm.

A. Principal

B. Board of Directors

C. Agents

D. Shareholders

4. It is the Insufficiency of information that is normally obtainable to the principal and to the
agents.

A. Agency Cost

B. Adverse Selection

C. Self-Interested Behavior

D. Conflict of Interest

5. 1. In corporate context, the key agency relationships are those between

A. BODs and Government

B. Stockholders and BODs

C. Banks and Stockholders

D. Stockholders and Public

6. Shareholders prefer excess funds to

A. Invest to additional product

B. Additional managerial compensation

C. Declare as dividend

B. None of the above

7.Which is not a financial press

A. Newspapers

B. Bloomberg TV

C. Magazines

D. ABS-CBN Sports and Action

8. What is the role of stock exchanges

A. Indicator of war

B. Distribute Loss

C. Increase liability

D. Improves corporate governance

9. It refers to an exercise of voting in behalf of shareholders through the use of special

authority given by shareholder/principal.

A. Derivative suit

B. Proxy voting

C. Proxy shareholder

D. Takeover

10. It allows a shareholder to bring an action in the name of the corporation against the
parties that may cause or is allegedly causing harm to the corporation.

A. Derivative suit

B. Derivative Authority

C. Derivative

D. None of the above

True or False

1. A corporation's managers cannot have personal objectives that compete with

the owners' objective of maximization of wealth.
2. Agency Cost would attempt to ensure that every managerial action is in
accordance with the shareholder interests.
3. Investment Banker refers to a public authority or government agency
responsible for implementing autonomous authority over some area of
corporate activity in a regulatory or supervisory capacity.
4. Financier is an individual or entity on which acts as an agent for corporation
issuing securities.
5. Shareholders have more doubts than trust to the agents.
6. The firm can be viewed as loosely defined contract between resource
providers and controllers.
7. The Friendly Takeover is a type of merger used by private companies to
become publicly-traded without passing through an initial public offering
(IPO).
8. In a Friendly Takeover before a bidder company makes an offer for another
company, it usually inform first the board of directors of the company to be
taken over.
9. The proxy in a proxy voting have the right to debate or otherwise participate
in the proceedings.
10. Stock exchange also offer services for the issue and redemption of securities
as well as other financial instruments .