Test bank International Finance MCQ (word)Chap 2.doc

Fundamentals of Multinational Finance, 3e (Moffett) Chapter 2 Financial Goals and Corporate Governance 2.1 Multiple Choice and True/False Questions 1) According to an article in the French newspaper Le Figaro, French firms that are mostly privately held are out-performed by firms that are more widely held public firms. Note: In this context performance is measured by return to the owners. Answer: FALSE Topic: Firm Value Skill: Recognition 2) It may be (is probably the case) that family owned businesses the world over out-perform their publicly traded brethren. Which of these factors is attributed to family owned firm dominance over public firms? A) a focus on the long-term B) they stick to their core business C) fewer agency problems (manager-owner conflicts) D) all of the above Answer: D Topic: Firm Value Skill: Conceptual 3) Anglo-American equity markets are characterized by widespread ownership of shares. In other parts of the world ownership is often dominated by consortiums of controlling shareholders. Which of the following is NOT an example of a common consortium of controlling shareholders? A) Japanese keiretsus B) South Korean chaebols C) U.S. labor unions D) all of the above are common controlling consortiums Answer: C Topic: Shareholder Value Skill: Recognition 4) The study of how shareholders can motivate management to accept the prescriptions of the shareholder wealth maximization model is ________. A) Sharpe/Treynor theory B) agency theory C) management theory D) corporate board control theory Answer: B Topic: Shareholder Value Skill: Recognition 5) During the 1990s, rapidly increasing stock prices exposed a flaw in the shareholder wealth maximization model, the seeking of short-term value maximization. Such behavior by management is characterized by all but which of the following? A) a focus on quarterly earnings B) overly generous