Reference no: EM132958109

Problem 1: Which of the following help convince managers to work in the best interest of the stockholders?

I. Compensation based on the value of the stock

II. Stock option plans

III. Threat of a proxy fight

IV. Threat of conversion to a partnership

A. I and II only

B. II and III only

C. I, II, and III only D. I and III only

E. I, II, III, and IV

Problem 2: A proxy fight occurs when:

A. the board of directors solicits renewal of current members.

B. a firm files for bankruptcy.

C. a shareholder sells shares in the open market.

D. a group solicits votes to replace the board of directors.

E. a firm is declared insolvent.

Problem 3: Which one of the following parties is considered a stakeholder of a firm?

A. Long-termcreditor

B. Short-term creditor

C. Employee

D. Preferred stockholder

E. Common stockholder