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Corporate governance has become increasingly important over the years. The Sarbanes-Oxley (SOX) Act

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Question;Corporate governance has;become increasingly important over the years. The Sarbanes-Oxley (SOX);Act was enacted to improve transparency in financial accounting and to prevent;fraud. Which of the following is correct?;?;?;fraud has not occurred since enactment of SOX;?;?;SOX has not increased auditing costs;?;?;government agencies are not required to comply withSOX;?;?;SOX requires companies to have a strong board ofdirectors;?;?;none of the above;Tactics that firms use to;avoid hostile takeovers include;?;?;greenmail;?;?;shareholder rights provisions.;?;?;restricted voting rights.;?;?;poison pills.;?;?;all of the above;Both Adams and Wolfe are;large public corporations with subsidiaries throughout the;world. Adams uses a centralized approach and;makes most of the decisions for its subsidiaries. Wolfe uses a;decentralized approach and its subsidiaries make most of their own;decisions. Which of the following is correct?;?;the agency problem would probably be more pronounced for Wolfe;because of a higher probability that subsidiary decisions would conflict with;the parent;?;agency costs would be the same for both companies;?;a decentralized approach is almost always better;?;a centralized approach is almost always better;?;none of the above;With convertible;bonds;?;the company receives additional cash money when the;convertibles are converted.;?;Investors are willing to accept a lower interest rate on a;convertible than on otherwise similar straight debt;?;Investors require a higher interest rate than on otherwise;similar straight debt;?;the convertibles cannot be converted for at least 10 years;?;none of the above;A firm's common stock;currently sells for $17.50. Its 10% convertible bonds (issued at par;$1000) now sell for $900 and the conversion price is $20. What;is the conversion ratio?;?;87.5;?;17.5;?;50.0;?;45.00;?;none of the above;Convertible bonds are;?;?;considered equity on the balance sheet;?;?;similar in risk to the company's common stock;?;?;riskier than the company's common stock;?;?;less risky than the company's common stock;?;?;none of the above;KORO Corporation's common;stock currently sells for $27.50. Its 8% convertible bonds (issued;at par $1000) now sell for $950. The bonds can be converted;into 40 shares of common stock. What is the conversion price?;?;?;$25;?;?;$40;?;?;$23.50;?;?;$38;?;?;none of the above;KORO Corporation's common;stock currently sells for $27.50. Its 8% convertible bonds;(issued at par $1000) now sell for $950. The bonds can be;converted into 40 shares of common stock. What is the conversion value of;the bond?;?;$688;?;$593.75;?;$950;?;$1,100;?;none of the above;Which of the following is;correct?;?;Warrants;are similar to long-term put options;?;The;company receives additional funds when warrants are exercised;?;The;company receives additional funds when bonds are converted;?;Warrants;can sometimes be detached and traded separately from the debt with which they;were issued, but this is unusual.;?;none;of the above;A company will issue;20-year bonds with annual interest payments. Each bond will include 20;warrants that give the holder to purchase one share of stock per;warrant. Each warrant is expected to have a value of $5.75. A;similar straight-debt issue would require an 8% coupon. What coupon;rate should be set on the bonds with warrants so that the package will;sell for $1,000?;?;?;5.76%;?;?;6.83%;?;?;7.94%;?;?;6.98%;?;?;none of the above

 

Paper#47542 | Written in 18-Jul-2015

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