Empirical studies have found that, across firms, Tobin's Q ratio initially increases with managerial ownership fraction, but beyond a critical level, the ratio decreases with further increases in managerial ownership
One argument for why this ratio decreases at higher managerial ownership levels is that:
a. board directors no longer believe that they need to monitor management's incentives.
b. fewer passive shareholders own the firm's stock.
c. outside blockholders tend to be attracted to firms with high managerial ownership, and outside blockholder ownership generally destroys firm value.
d. management can use their shares to leverage their entrenched position.
D
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Parrish Farms produces homemade cheese. Last year, it managed to exceed its target ROI for the current fiscal year. The following results were found on its financial statements: Gross Revenues: $250,000 Total Assets: $500,000 Gross Profits: $100,000 Total Liabilities: $200,000 Net Profits after Tax: $ 50,000 Owner's Equity: $300,000 What was the actual return on investment (ROI) for Parrish Farms?
a. 6.67 percent b. 10 percent c. 28 percent d. 22 percent
An example of a slide-type error is writing:
A) $1600 as $6100. B) $600 as $1200. C) $4000 as $8000. D) $700 as $70.