Question

1) Board directors are keenly aware that they perform at their very best when cultural diversity, diversity of thought and diversity of perspectives are included around the board table. Which of the following attributes is not a strategic fit with this objective:

a) stakeholders have a higher comfort level with decision-making when the board represents the diversity that exists within their workplaces and communities

b) collegial boards are less likely to accept and integrate differences of opinion and practice respectful disagreement

c) multiple perspectives let creativity flourish

d) corporations are becoming more adaptable and agile

2) When considering a firm's capital structure, tensions between debtholders and shareholders can impact the firm by all except:

a) firms needing to engage in riskier business activities because the firm must respond to changing competitive pressures will most likely select equity financing

b) limiting its ability to match its competitive environment with optimal funding options

c) changing the corporate governance structure from internal control to external control if higher equity financing is selected

d) constraining opportunistic behavior and managerial discretion through debtholder control measures

3) In general, corporate governance is presented from the perspective of a firm with widely dispersed ownership, but in practice, that model of ownership faces a range of specific problems. Which of the following is an exception:

a) easy access to relevant information about the firm's operations aided by a collaborative management team

b) the limited effect of large institutional investors, including banks, hedge funds and other large financial players, and the pooling of pension funds

c) the influx of fresh capital through new listings and a deeper capital market, thus increasing shareholder participation

d) the principal-agent problem arises and company performance can suffer, to the detriment of the owners (the shareholders)

4) You have been brought in as an independent analyst to investigate the cost structure of a small start-up firm, Feveot Inc. Currently Feveot only manufactures one product, the Feveot Nodule.  According to last year's income statement, it costs Feveot $45.83 to make one Nodule, which they can then sell for $69.01 per unit. If Feveot has $364,000 in fixed costs, what is its breakeven point in terms of volume? Round to the nearest whole number.

Answer 1

1..ANSWER: b) collegial boards are less likely to accept and integrate differences of opinion and practice respectful disagreement

When there is so much rom for diversity among colleagues of the Board,each one is more likely to agree to disagree in a respectful manner & not as said here.

2.. ANSWER: a.

a) firms needing to engage in riskier business activities because the firm must respond to changing competitive pressures will most likely select equity financing

Attending to peer pressures,the firm does not want to add/take on outside debt & its attendant burdens.

3..ANSWER: d.

d) the principal-agent problem arises and company performance can suffer, to the detriment of the owners (the shareholders)

All the other problems are specific to corporate governance .

4..

Breakeven point in terms of volume=Fixed costs/Contribution per unit

ie. BEP(in units)=Fixed costs/(selling price-Variable cost)

ie. 364000/(69.01-45.83)=

15703

units