Why would the managers of a firm take a foreign project with a lower domestic currency NPV and a higher return variance rather than a foreign project with a higher domestic currency NPV but a lower return variance?
What will be an ideal response?
This is an example of the asset substitution issue that we covered in Chapter 16 . Because shareholders only gain in good states of the world, they like the variance of the firm to be high. When the variance of the firm is higher, the shareholders gain more in the good states of the world. The bondholders get paid their full amount in good states of the world, and they get the value of the firm in the bad states of the world. By accepting a high variance project, managers may be able to shift some value from bondholders to shareholders in an asset substitution.
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________ involves a single dependent variable and two or more independent variables
A) Analysis of variance B) Factor analysis C) Correlation analysis D) Multiple regression E) Canonical correlation
What effect has the False Claims Act had on ethical claims among organizations in the United States?
a. It has had no discernible effect. b. It has largely taken the place of internal ethics reporting systems. c. It has resulted in billions of dollars in civil fraud settlements and judgments against corporations. d. It has reduced the number of ethical claims made within corporations.
A variance is the difference between standard costs and actual costs
Indicate whether the statement is true or false
Answer the following statement(s) true (T) or false (F)
1. According to the feature, PERSONAL REFLECTIONS: THE WORDS, a speaker who is skilled at using words can move his followers to action even without an important cause. 2. Impression management is often used to help others save face. 3. A study examined self-promotion and ingratiation, and found that they were not related to organizational citizenship behaviors, team member satisfaction, or to the degree of liking team members felt for each other. 4. Napoleon scored his first major victory with the pen, not the sword.