Question

T or F 11) In the Shareholder Wealth Maximization Model the primary goal of management is to maximize the wealth of all stakeholders.

T or F 12) Poor firm performance is more likely to lead to takeover or firm restructuring under the Shareholder Wealth Maximization than under the Stakeholder Capitalism Model.

T or F 13) LIBOR is the London Inter-Bank Offer Rate and represents the rate at which London banks are willing to lend to other London banks.

T or F 14) Daily trading volume in the world foreign exchange markets is measured in millions of dollars.

T or F 15) In general, the four or five major currencies represent about only 25% of foreign exchange.

T or F 16) A foreign currency futures or forward contract involves the future exchange of agreed amounts of currency on a specific date.

T or F 17) By selling pounds forward you will have locked in the price at which you will receive pounds in exchange for another currency.

T or F 18) An Out-of-the-money option has an underlying spot rate that is equal to the exercise price.

T or F 19) A swap contract can allow a firm to modify existing asset or liability cash-flows from variable to fixed (or vice versa) and from one currency to another currency.

T or F 20) Swap contracts are a series of options negotiated together rather than individually.

Answer 1

11.

In the Shareholder Wealth Maximization Model the primary goal of management is to maximize the wealth of all stakeholders that is increase the share price of comapny.

Statement is true.

12.

Poor firm performance is more likely to lead to takeover or firm restructuring under the Shareholder Wealth Maximization than under the Stakeholder Capitalism Model.

Statement is false.

13.

LIBOR is the London Inter-Bank Offer Rate and represents the rate at which London banks are willing to lend to other London banks.

Statement is true.

14.

Daily trading volume in the world foreign exchange markets is measured in millions of dollars because Dollar is most used currency in international trading.

Statement is true.

15.

In general, the four or five major currencies represent about only 95% of foreign exchange.

So, statement is false.