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Intermediate Financial Management 12th Edition Brigham Test Bank
Intermediate Financial Management 12th Edition Brigham Test Bank
3. The CEO of D'Amico Motors has been granted some stock options that have provisions similar to most other executive
stock options. If D'Amico's stock underperforms the market, these options will necessarily be worthless.
a. True
b. False
ANSWER: False
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: INTE.GENE.16.67 - LO: 10-2
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking
STATE STANDARDS: United States - AK - DISC: Financial statements, anal - DISC: Financial statements, analysis,
forecasting, and cash flows
LOCAL STANDARDS: United States - OH - Default City - TBA
TOPICS: Stock options
KEYWORDS: Bloom’s: Comprehension
4. ESOPs were originally designed to help improve worker productivity, but today they are also used to help prevent
Cengage Learning Testing, Powered by Cognero Page 1
CHAPTER 10—CORPORATE GOVERNANCE
hostile takeovers.
a. True
b. False
ANSWER: True
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: INTE.GENE.16.68 - LO: 10-3
NATIONAL STANDARDS: United States - BUSPROG: Reflective Thinking
STATE STANDARDS: United States - AK - DISC: Financial statements, anal - DISC: Financial statements, analysis,
forecasting, and cash flows
LOCAL STANDARDS: United States - OH - Default City - TBA
TOPICS: ESOP
KEYWORDS: Bloom’s: Comprehension
5. Which of the following is NOT normally regarded as being a barrier to hostile takeovers?
a. Targeted share repurchases.
b. Shareholder rights provisions.
c. Restricted voting rights.
d. Poison pills.
e. Abnormally high executive compensation.
ANSWER: e
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: INTE.GENE.16.67 - LO: 10-2
NATIONAL STANDARDS: United States - BUSPROG: Analytic
STATE STANDARDS: United States - AK - DISC: Financial statements, anal - DISC: Financial statements, analysis,
forecasting, and cash flows
LOCAL STANDARDS: United States - OH - Default City - TBA
TOPICS: Corporate governance
KEYWORDS: Bloom’s: Analysis
OTHER: TYPE: Multiple Choice: Conceptual
6. Which of the following is NOT normally regarded as being a good reason to establish an ESOP?
a. To enable the firm to borrow at a below-market interest rate.
b. To make it easier to grant stock options to employees.
c. To help prevent a hostile takeover.
d. To help retain valued employees.
e. To increase worker productivity.
ANSWER: b
RATIONALE: Statement b is the correct answer, because firms can easily grant stock options to employees
without an ESOP.
POINTS: 1
DIFFICULTY: Difficulty: Moderate
LEARNING OBJECTIVES: INTE.GENE.16.68 - LO: 10-3