【正文】 ement might make more sense. Est time: 06–10 23. The national chain has a great incentive to impose quality control on all of its outlets. If one store serves its customers poorly, that can result in lost future sales. The reputation of each restaurant in the chain depends on the quality in all the other stores. In contrast, if Joe’s serves mostly passing travelers who are unlikely to show up again, unsatisfied customers pose a far lower cost. They are unlikely to be seen again anyway, so reputation is not a valuable asset. The important distinction is not that Joe has one outlet while the national chain has many. Instead, it is the likelihood of repeat relations with customers and the value of reputation. If Joe’s were located in the center of town instead of on the highway, one would expect his clientele to be repeat customers from town. He would then have the same incentive to establish a good reputation as the chain has. Est time: 01–05 24. Traders can earn huge bonuses when their trades are very profitable, but if the trades lose large sums, as in the case of Barings Bank, the trader’s exposure is limited. This asymmetry can create an incentive to take big risks with the firm’s (., the shareholders’) money. This is an agency problem. Est time: 01–05 Chapter 01 Goals and Governance of the Corporation 18 169。 often these corporations can obtain debt financing only if the shareholders provide these personal guarantees. Est time: 01–05 18. The stock price reflects the value of both current and future dividends that the shareholders expect to receive. In contrast, profits reflect performance in the current year only. Profit maximizers may try to improve this year’s profits at the expense of future profits. But stockprice maximizers will take account of the entire stream of cash flows that the firm can generate. They are more apt to be forwardlooking. Est time: 01–05 19. In this situation, a ―superior‖ rate of return is a rate greater than the rate of return investors could earn elsewhere in the financial markets from alternative investments with risk equal to that of the ―lowrisk capital investment‖ described in the problem. Fritz (who is riskaverse) will applaud the investment because he can maintain the risk level he prefers while earning a superior return. Frieda (who is risktolerant) will applaud the investment because investors will be willing to pay more for the shares Frieda owns than they would have paid if the firm had not made this lowrisk capital investment. Frieda would be likely to sell her shares to a more riskaverse investor and use the proceeds of her sale to invest in shares of a pany with a very high rate of return and mensurate high level of risk. Est time: 01–05 20. a. This action might appear, superficially, to be a grant to former employees and thus not consistent with value maximization. However, such ―benevolent‖ actions might enhance the firm’s reputation as a good place to work, might result in greater loyalty on the part of current employees, and might contribute to the firm’s recruiting efforts. Therefore, from a broader perspective, the action may be valuemaximizing. Chapter 01 Goals and Governance of the Corporation 16 169。 2020 by McGrawHill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 12. Takeover defenses increase the target firm’s agency problems. One of the mechanisms that stockholders rely on to mitigate agency problems is the threat that an underperforming pany (with an underperforming management) will be taken over by another pany. If management is protected against takeovers by takeover defenses, it is more likely that managers will act in their own best interest, rather than in the interests of the firm and its stockholders. Est time: 01–05 13. Both capital budgeting decisions and capital structure decisions are longterm financial decisions. However, capital budgeting decisions are longterm investment decisions, while capital structure decisions are longterm financing decisions. Capital structure decisions essentially involve selecting between equity financing and longterm debt financing. Est time: 01–05 14. A bank loan is not a ―real‖ asset that can be used to produce goods or services. Rather, a bank loan is a claim on cash flows generated by other activities, which makes it a financial asset. Est time: 01–05 15. Investment in research and development creates knowhow. This knowledge is then used to produce goods and services, which makes it a real asset. Est time: 01–05 16. The responsibilities of the treasurer include the following: supervising cash management, raising capital, and banking relationships. The controller’s responsibilities include supervision of accounting, preparation of financial statements, and tax matters. The CFO of a large corporation supervises both the treasurer and the controller. The CFO is responsible for largescale corporate planning and financial policy. Est time: 01–05 Chapter 01 Goals and Governance of the Corporation 15 169。 2020 by McGrawHill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part. 9. A corporation might cut its labor force dramatically, which could reduce immediate expenses and increase profits in the short term. Over the long term, however, the firm might not be able to serve its customers properly, or it m