The Sarbanes-Oxley Act of 2002 Was Designed to Increase

question 53

Multiple Choice

The Sarbanes-Oxley Act of 2002 was designed to increase

• A) investor confidence.
• B) government ownership.
• C) the number of firms.
• D) executive salaries.
• E) income equality.

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Definitions:

NPVGO

Net Present Value of Growth Opportunities, a measure assessing the value of future investment opportunities of a company.

Growth Opportunities

Prospects or chances a company has to expand its operations, increase sales, and achieve higher profits.

Risk-Adjusted

A process of modifying financial projections or valuations to account for the uncertainty and potential risk involved.

Cost of Equity Capital

The return that investors expect for providing capital to a company, factoring in the risk of equity investments.