Presumption That Corporate Managers Can Be Left to Act in the Best

question 12

Multiple Choice

Presumption that corporate managers can be left to act in the best interests of shareholders is based on:

• A) Professional quality
• B) The belief that a poorly performing company will be the subject of takeovers
• C) Management discipline
• D) The threat of which is sufficient to discipline managers to act in the shareholders' interests.

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Definitions:

Collateral

Collateral refers to assets that a borrower offers to a lender to secure a loan. If the borrower defaults, the lender can seize the collateral to recover the loaned amount.

Fixed-Rate Mortgage

A mortgage with an interest rate that remains constant throughout the life of the loan.

Acceleration Clause

A contract provision that allows a lender to require a borrower to repay all of an outstanding loan if certain agreed upon conditions are not met.

Market Value

The price at which an asset would trade in a competitive auction setting, reflecting what a willing buyer would pay a willing seller.