Chapter 2
Fundamentals of Multinational Finance, 4e (Moffett)
Chapter 2 Financial Goals and Corporate Governance
Multiple Choice and True/False Questions
2.1 Who Owns the Business?
1) The authors suggest that the most likely progression of ownership goes from
A) 100% privately held, to 80% privately held, to 40% privately held, to 0% privately held.
B) 0% privately held, to 40% privately held, to 80% privately held, to 100% privately held.
C) privately held firms stay private, and publicly traded firms stay public.
D) none of the above.
Answer: A
Diff: 1
Topic: 2.1 Business Ownership
Skill: Recognition
2) Which of the following do NOT enhance control of publicly traded firms by select groups of shareholders?
A) dual classes of stock with differential voting rights
B) simultaneous election of members of the board of directors
C) interlocking directorates
D) takeover safeguards
Answer: B
Diff: 1
Topic: 2.1 Business Ownership
Skill: Conceptual
3) 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
Diff: 1
Topic: 2.1 Business Ownership
Skill: Recognition
4) 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
Diff: 1
Topic: 2.1 Business Ownership
Skill: Conceptual
5) 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
Chapter 2 Financial Goals and Corporate Governance
Multiple Choice and True/False Questions
2.1 Who Owns the Business?
1) The authors suggest that the most likely progression of ownership goes from
A) 100% privately held, to 80% privately held, to 40% privately held, to 0% privately held.
B) 0% privately held, to 40% privately held, to 80% privately held, to 100% privately held.
C) privately held firms stay private, and publicly traded firms stay public.
D) none of the above.
Answer: A
Diff: 1
Topic: 2.1 Business Ownership
Skill: Recognition
2) Which of the following do NOT enhance control of publicly traded firms by select groups of shareholders?
A) dual classes of stock with differential voting rights
B) simultaneous election of members of the board of directors
C) interlocking directorates
D) takeover safeguards
Answer: B
Diff: 1
Topic: 2.1 Business Ownership
Skill: Conceptual
3) 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
Diff: 1
Topic: 2.1 Business Ownership
Skill: Recognition
4) 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
Diff: 1
Topic: 2.1 Business Ownership
Skill: Conceptual
5) 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