Eco550 Midterm

In: Business and Management

Submitted By struik0630
Words 1421
Pages 6
Question 1
The primary objective of a for-profit firm is to ___________.
Selected Answer: Correct Answer:

5 out of 5 points

maximize shareholder value maximize shareholder value

Question 2

5 out of 5 points

The flat-screen plasma TVs are selling extremely well. The originators of this technology are earning higher profits. What theory of profit best reflects the performance of the plasma screen makers?
Selected Answer: Correct Answer:

innovation theory of profit innovation theory of profit

Question 3

5 out of 5 points

The Saturn Corporation (once a division of GM) was permanently closed in 2009. What went wrong with Saturn?
Selected Answer: Correct Answer:

Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return. Saturn sold cars below the prices of Honda or Toyota, earning a low 3% rate of return.

Question 4
To reduce Agency Problems, executive compensation should be designed to:
Selected Answer: Correct Answer:

5 out of 5 points

create incentives so that managers act like owners of the firm. create incentives so that managers act like owners of the firm.

Question 5
The ____ is the ratio of ____ to the ____.
Selected Answer: Correct Answer:

5 out of 5 points

coefficient of variation; standard deviation; expected value coefficient of variation; standard deviation; expected value

Question 6

5 out of 5 points

The primary difference(s) between the standard deviation and the coefficient of variation as measures of risk are:
Selected Answer: Correct Answer:

the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk the coefficient of variation is a measure of relative risk whereas the standard deviation is a measure of absolute risk

Question 7

5 out of 5 points

The net present value of an investment…...

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