It would be remarkableif firm managers did not pay attention to the profit interests of their leading shareholders given the various sources of corporate accountability such as executive compensation incentives, takeovers, control contests, labor markets, and direct communications. Multiple choice questions 5 points each 1 the. If interest rates fall before you sell the bond, you will sell at a higher price than if interest rates had been constant. | **Probability (same for each year)** | **Price of Diesel Fuel per Gallon** | | | The increasing percentage ownership of public corporations by institutional investors has A. had no effect on corporate management. Maximization of shareholder wealth is a concept in which optimally increasing the long-term value of the firm is emphasized. The major difficulty in most insider-trading cases has been that inside trades have not been legally well-defined. Common stock currently sells for $27 and is expected to pay a dividend of $0.50. \end{array} How would you explain the increase in womens participation in the labor force? **3. $$ [Solved] The increasing percentage ownership of public corporations by institutional investors has A) had no effect on corporate management. | $0.1$ | $\$ 0.80$ | $\$ 0.90$ | $\$ 1.00$ | The result is executive compensation being based more on the performance of a firms total industry rather than the firm itself. Asset accounts are listed in order of their, ____ securities are short term investments and are valued on the balance sheet at their original purchase price. the increasing percentage ownership of public corporations by institutional investors has. **10. There is a lot of buzz around the topic of institutional investor engagement in Asia. Which of the following is NOT a characteristic of commercial paper? Forecast for assumption 2 (high fuel prices): Under tight money conditions (40% probability), Plan A will produce $43,000 less than Plan B. **Transactions and Events** A. increased earnings is of primary importance. This reflects a more general shift towards passive investment strategies such as index funds that rely on portfolio diversification. The reports authors recognize that other categories like closed-end investment companies, proprietary trading desks of investment banks, foundations, and endowments could be added but have been conspicuously omitted due to lack of reliable data. C. created more pressure on public companies to manage their firms more efficiently. ** What is Research In Motions return on assets? The SEC has long been in favor of making public corporations, especially publicly traded ones, more transparent. You hold a long-term bond yielding 10%. The increasing percentage ownership of public corporations by institutional investors has A. had no effect on corporate management.B. Your email address will not be published. | Net income | 2,457 | Several policies have been proposed to counteract the harms of horizontal shareholdings. **6. ** A zoological society made a payment of$30,000 to a local bank to repay the principal of a short-term note payable. More worrying is the unintentional collusion through the owners corporate governance communications, the information flows between the firms and owners, and the incentives to lessen competition that common ownership brings, without any coordination or communications among the ostensibly competing firms. someone has information not available to the public which they use to profit from trading in stocks. A less drastic suggestion(but which would require new legislation) is to take away tax advantages enjoyed by retirement funds that are invested in mutual funds with a significant number of shares in more than one firm in an industry. For example, there is substantial common ownership among U.S. airlines. In the mid-1960s, physical persons held as much as 84% of all publicly listed stocks in the United States. The internationalization of the financial markets has allowed firms such as McDonald's to raise capital around the world. **1. C. \text { December } & 3,000,000 You deposit $300 to open the Financial instruments in the capital markets generally fall under which category in the balance sheet? If a transaction or event is reported in more than one section on the statement of cash flows, you should include all sections in your answer. The Sarbanes-Oxley Act was passed in an effort to, 79. Insider trading occurs when. created higher returns for the stock market in general. **15. A short-term creditor would be most interested in. B.created higher returns for the stock market in general. In many industries the same institutional investors are the largest owners of many competing companies. Meanwhile, the second and third largest shareholders, hold 6 . ** How much are total expenses for Research In Motion for the year ended February 27, 2010? This means that the potential beneficiaries of anti-competitive behaviour investors are often wealthier than the consumers who pay the higher prices.In fact, as the chart below shows, the increase in common ownerships from 1985 to 2015 coincides with the rise in wealth inequality. Similarly, common ownership among banksin a particular county is associated with higher fees and lower deposit interest rates. The only way to make the information public is to make it a right. Which of the following is NOT a method for lenders to control pledged inventory? Jury's dividend growth rate is 8%, and. ** Does Research In Motions return on assets seem satisfactory if competitors average an 18% return? So if you are in a position to buy a public company, you may want to buy it. the number of stockholders is unlimited.D. Why are there two account titles in the amount column of the purchases journal? Theory and evidence suggests that horizontal shareholding harms competition, consumers, and the economy. But a different form of monopoly has largely escaped the limelight. Dec. 31 Adjusted the year-end accounts for the accrued interest earned on the White note. Yet all of society bears the costs of less competitive goods and services. The OECD recently released a corporate governance working paper on Institutional Investors as Owners: Who Are They and What Do They Do? The paper has been written from a public policy perspective and considers the role of ownership engagement in effective capital allocation and monitoring of corporate performance. In this case, which of the following statements is true? d. $$ \hline \text { July } & \$ 12,000,000 \\ ** What is the total amount of assets invested in Research In Motion? A _____is a long-term senior bond without collateral. created more pressure on public companies to manage their firms more efficiently. Sixty new trucks will cost Kennedy Trucking $\$ 5$ million. Overall, institutional investors (which may offer both active and passive funds) own 80% of all stock in the S&P 500. | Liabilities + Equity | $10,204 | How to develop a winning strategyand put it to work. Analytics help us understand how the site is used, and which pages are the most popular. T/F, If an investor hears of a large change that a company is going to make through a news article and reacts quicker than any other investor, it is considered insider trading. Larger, if businesses lower prices on the products they make.\ ** Access Research In Motions financial statements (Form 10-K) for fiscal years ending after February 27, 2010, from its Website **(RIM.com)** or from the SEC Website **(www.sec.gov)** and compute its return on assets for those fiscal years. ** A voluntary health and welfare organization received $25,000 from a donor who stipulated that the amount be invested permanently. What is the expected value or return? Which of the following is not a money market instrument? A. had no effect on corporate management. The Sarbanes-Oxley Act reduced agency conflicts by giving corporate managers greater flexibility to select their preferred candidates to the board of directors. All of the following are methods of controlling receivables except. The major difficulty in most insider-trading cases has been primary market. And although money managers at an institutional investor look after a relatively small portfolio, the shareholder voting rights of all funds within the institutional investor fund family are usually exercised jointly. C. Smaller, if workers demand and receive higher wages.\ The effective rate on a loan with a 7.1% stated rate and 20% compensating balance is approximately _____. What should be the primary goal of financial management? The increasing percentage ownership of public corporations by institutional investors has that inside trades have not been legally well-defined. The increasing percentage ownership of public corporations by institutional investors has A. had no effect on corporate management. Finally, the incentives to lobby for anti-competitive behavior are even greater for active funds, which are a much larger shareof horizontal shareholdings. \ In the UK, the percentage has reduced from 54% to 11% in the last 50 years, and in Japan, only 18% of all public equity was held by physical persons in 2011. Institutional Investors: What Is Their Role as Owners of Public Companies? C. General Public Ownership. Do you agree. C. created more pressure on public companies to manage their firms more efficiently. A 2-for-1 stock split is declared. Which of the following would indicate an accurate statement of cash flows? C.created more pressure on public companies to manage their firms more efficiently. ** A hospital's accounts receivable from patients increased $100,000 during the year. Access more than 40 courses trusted by Fortune 500 companies. Mr. Hoffman, the president, had found that the company uses an average of 10 million gallons of diesel fuel per year at a price of $\$ 1.25$ per gallon. Under a special provision from the Interstate Commerce Commission, the allowable depreciation will be 25 percent in year 1,38 percent in year 2, and 37 percent in year 3 . Companies seek equity financing from investors to finance short or long-term needs by selling an ownership stake in the form of shares. The increase in the internationalization of financial markets has led to, Fundamentals of Financial Management, Concise Edition, Claudia Bienias Gilbertson, Debra Gentene, Mark W Lehman, Daniel F Viele, David H Marshall, Wayne W McManus, Jeffrey Jaffe, Randolph W. Westerfield, Stephen A. Ross. Each subsequent deposit is 8 percent larger than the On average, 414 institutional investors, of which 240 are pressure-sensitive and 174 are pressure-insensitive, hold stock in each firm in our sample. In fact, in many of these industries common ownership is even higher than it first appears because some large stockholders, such as J.P Morgan Asset Management, may be owned in part by other institutional owners. The pre-tax cost of debt for a new issue of debt is determined by, The after-tax cost of preferred stock to the issuing corporation, The cost of equity capital in the form of new common stock will be higher than the cost of retained earnings because of, A firm's debt-to-equity ratio varies at times because, The weighted average cost of capital is used as a discount rate because, Although debt financing is usually the cheapest component of capital, it cannot be used in excess because, In a general sense, "cash flow" can be said to equal, The first step in the capital budgeting process is, Capital budgeting is primarily concerned with. 1 the shift has come as more american families participate in the capital markets through pooled-investment vehicles, such as mutual funds and Together these airlines have over halfof domestic market share. The following table displays Dynabase Tool's estimated total funding needs for the upcoming year. Course Hero uses AI to attempt to automatically extract content from documents to surface to you and others so you can study better, e.g., in search results, to enrich docs, and more. Pressure to increase current asset buildup often results from, Working capital management is primarily concerned with the management and financing of, The term "permanent current assets" implies, If a firm uses level production with seasonal sales, Normally, permanent current assets should be financed by, U.S. government securities are used to construct yield curves because, The theory of the term structure of interest rates, which suggests that long-term rates are determined by the of short-term rates expected over the time that a long-term bond is outstanding, is the, Some analysts believe that the term structure of interest rates is determined by the behavior of various types of financial institutions. But do the damages reach further? Institutional investors are a complex, heterogeneous group. | $0.1$ | Year 1 | Year 2 | Year 3 | What is his approximate effective rate of interest? t/f The time value of money is a useful concept in determining the value of a bond or in capital investment decisions. This textbook can be purchased at www.amazon.com, Chapter 01 - The Goals and Functions of Financial Management, 78. The Organisation for Economic Co-operation and Development (OECD) recently released a corporate governance working paper onInstitutional Investors as Owners: Who Are They and What Do They Do?The paper has been written from a public policy perspective and considers the role of ownership engagement in effective capital allocation and monitoring of corporate performance. Adjusted the year-end accounts for the accrued interest earned on the White note put it to.... The same institutional investors as Owners of many competing companies new trucks cost! 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