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SDSU BA 323 FINANCE EXAM 1 NEWEST 2025/2026 ACTUAL EXAM
WITH COMPLETE QUESTIONS AND CORRECT DETAILED ANSWERS
(100% VERIFIED ANSWERS) |ALREADY GRADED A+| ||PROFESSOR
VERIFIED||
Why do shareholders have a conflict of interest with managers? -
ANSWER-Managers tend to conflict with shareholders since they
tend to act within self-interest (Compensation packages,
interventions by shareholders, threat of firing, and threat of
takeover)
•What is corporate governance?
•What are various strategies for aligning the interests of
shareholders and management?
•Change in CEO Compensation starting in the 1980s
•Why is it a good idea for CEO compensation to track an overall
market index like the S&P 500? - ANSWER-Corporate
governance is the act of holding managers accountable for poor
performance.
Strategies to align interests of shareholders and management
include:
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Using stock as a form of compensation.
Vesting periods.
Stronger oversight by board or outside investors.
CEO compensation is tracked with an overall market index
because it correlates with the corporations performance.
What is the bondholder-stockholder conflict? Do bondholders
prefer safer or risky corporate investments? - ANSWER-
Stockholders are more likely to prefer riskier projects for
additional gains whereas bondholders prefer safer options.
What is the difference between shareholder theory and
stakeholder theory? - ANSWER-Shareholders theory states that it
is the manager's duty to maximize shareholder returns while
stakeholders theory states that managers have the ethical duty to
ensure that their activities do not harm the community.
Shareholders are involved on a short term basis while
stakeholders are involved on a longterm basis.
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•What are the three ways that capital is transferred between
savers and borrowers?
•What are examples of each?
•Which firms/types of firms will use each method? - ANSWER-The
three ways are:
Direct transfer
Investment banks
Financial intermediaries
Direct Transfer - ANSWER-Business sells stock directly to savers
w/o going through a financial institution. Typically done by small
firms for little capital gains.
investment bank - ANSWER-Companies sell stock or bonds to the
underwriter, which is then sold by the investment bank to
savers.(Ex: Goldman Sachs and Morgan Stanley) Underwriters
take on risk.
financial intermediaries (banks) - ANSWER-Loans made through
a financial intermediary (banks, insurance company, mutual fund).
SDSU BA 323 FINANCE EXAM 1 NEWEST 2025/2026 ACTUAL EXAM
WITH COMPLETE QUESTIONS AND CORRECT DETAILED ANSWERS
(100% VERIFIED ANSWERS) |ALREADY GRADED A+| ||PROFESSOR
VERIFIED||
Why do shareholders have a conflict of interest with managers? -
ANSWER-Managers tend to conflict with shareholders since they
tend to act within self-interest (Compensation packages,
interventions by shareholders, threat of firing, and threat of
takeover)
•What is corporate governance?
•What are various strategies for aligning the interests of
shareholders and management?
•Change in CEO Compensation starting in the 1980s
•Why is it a good idea for CEO compensation to track an overall
market index like the S&P 500? - ANSWER-Corporate
governance is the act of holding managers accountable for poor
performance.
Strategies to align interests of shareholders and management
include:
,2|Page
Using stock as a form of compensation.
Vesting periods.
Stronger oversight by board or outside investors.
CEO compensation is tracked with an overall market index
because it correlates with the corporations performance.
What is the bondholder-stockholder conflict? Do bondholders
prefer safer or risky corporate investments? - ANSWER-
Stockholders are more likely to prefer riskier projects for
additional gains whereas bondholders prefer safer options.
What is the difference between shareholder theory and
stakeholder theory? - ANSWER-Shareholders theory states that it
is the manager's duty to maximize shareholder returns while
stakeholders theory states that managers have the ethical duty to
ensure that their activities do not harm the community.
Shareholders are involved on a short term basis while
stakeholders are involved on a longterm basis.
, 3|Page
•What are the three ways that capital is transferred between
savers and borrowers?
•What are examples of each?
•Which firms/types of firms will use each method? - ANSWER-The
three ways are:
Direct transfer
Investment banks
Financial intermediaries
Direct Transfer - ANSWER-Business sells stock directly to savers
w/o going through a financial institution. Typically done by small
firms for little capital gains.
investment bank - ANSWER-Companies sell stock or bonds to the
underwriter, which is then sold by the investment bank to
savers.(Ex: Goldman Sachs and Morgan Stanley) Underwriters
take on risk.
financial intermediaries (banks) - ANSWER-Loans made through
a financial intermediary (banks, insurance company, mutual fund).
