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Free Financial CABM Exam Questions

Which mechanism is used to motivate managers to act in the shareholder's best interest?

  1. threat of firing
  2. threat of takeover
  3. managerial compensation plans
  4. All of the above

Answer(s): D



In , managers of the acquired firm generally are fired, and who are able to stay on lose the power they had prior top the acquisition.

  1. Prison pill
  2. Hostile takeover
  3. Adverse takeover
  4. Antagonistic prison

Answer(s): B



Greenmail, which is like blackmail, occurs when:

  1. potential acquirer buys a block of stock in a company
  2. the target company's management becomes frightened that the acquirer will make a tender offer and gain control of the company
  3. head off a possible takeover, management offer to pay greenmail, buying the stock owned by the potential raider at a price above the existing market price
  4. All of the above

Answer(s): D



Creditors lend funds to the firm at rates that are based on:

  1. riskiness of the firm's existing assets
  2. expectations concerning the riskiness of future asset additions
  3. firm's existing capital structure
  4. All of the above

Answer(s): D



Financial management decisions can be divided into the management of assets and liabilities in:

  1. long term
  2. short term
  3. Both A and B
  4. Neither A nor B

Answer(s): C



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