T or F: If investors are unsure about the quality of information managers provid
ID: 2732446 • Letter: T
Question
T or F: If investors are unsure about the quality of information managers provide, they tend to discount the companys expected free cash flows at a lower cost of capital, which reduces the companys intrinsic value
T or F: The empirical results from academic studies show that there is a strong correlation between executive compensation and corporate performance; more specifically, most of the studies suggest that the compensation plans have positive effect on company performance.
T or F: Today, a typical board of directors has about one-third insiders and two-thirds outsiders, and most outsiders are truly independent. Moreover, board members are compensated primarily with stock or options rather than a straight salary.
T or F: The NPV of a relatively long-term project, defined as one for which a high percentage of its cash flows are expected in the distant future, is less sensitive to changes in the cost of capital than is the NPV of a short – term project.
T or F: In general, if a owner-manager owns a smaller percentage of the firm’s equity, he has a greater incentive to consume perquisites
Explanation / Answer
1 .False . If the uncertainit increase the cost of capital should increase
2 True. Compensations plans tend to increase morae of employees
3. True
4 False , farther the cashflows more sensitve the NPV becomes to chnages in discount rate
5. True
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.