If a Manager Does Not Own Stocks in the Firm

question 49

Multiple Choice

If a manager does not own stocks in the firm he is running:

• A)he cannot be considered a bona fide manager.
• B)he is not a residual claimant.
• C)he still is a residual claimant since he has a say on how firm's resources are used.
• D)he is called a lame duck manager.

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Definitions:

Shareholder

An individual or entity that owns one or more shares of stock in a publicly-traded company, making them partial owners.

Firm's Profits

The financial gains a firm obtains after deducting all expenses, taxes, and costs from its total revenues.

Financial Capital Markets

Marketplaces where individuals and institutions can trade financial securities, commodities, and other fungible assets.

Savers

Individuals who allocate a portion of their income towards savings, either in cash, bank deposits, or other forms of investment, for future use.