Reference no: EM132958102

Problem 1: The issuance of new equity shares is a cash flow from:

A. long-term creditors to a firm.

B. a firm to its shareholders.

C. a firm's suppliers to the firm.

D. the financial markets to a firm.

E. any one of a firm's stakeholders to the firm.

Problem 2: Agency costs refer to:

A. corporate income subject to double taxation.

B. the total dividends paid to stockholders over the lifetime of a firm.

C. the costs of any conflicts of interest between stockholders and management.

D. the costs that result from default and bankruptcy of a firm.

E. the total interest paid to creditors over the lifetime of the firm.

Problem 3: Which of the following are key requirements of the Sarbanes-Oxley Act?

I. Officers of the corporation must now own more than 5 percent of the firm's stock.

II. Officers of the corporation must review and sign annual reports.

III. Annual reports must list deficiencies in internal controls.

IV. Annual reports must be filed with the SEC within 30 days of year end.

A. I only

B. II only

C. I and III only

D. II and III only

E. II and IV only