Multiple choice

1. Professors Harry Markowitz and William Sharpe received their noble prize in economics for their contribution to the.

a. Option pricing model. 

b. Theories of working capital management 

c. Theories of risk- return and portfolio theory

d. Theories of international capital budgeting 

2. With a Subchapter S corporation.

a. Income is taxed as direct income is stockholders 

b. Stockholders have the same liability as member of a partnership 

c. The number of stockholders is unlimited 

d. Life of the corporation is limited 

3. Agency theory would imply that conflicts are more likely to occur between management and shareholders when 

a. The company is owned and operated by the same person 

b. Management acts in the interested of maximizing shareholders wealth.

c. The chairman of the board is also the chief executive officer (CEO). 

d. The boards of directors exerts strong and involved oversight of management 

4.  The Sarbanes-Oxley Act set up the public company accounting oversight board with the responsibility for all of the following except.

a. Auditing standards with is companies 

b. Controlling the quality of audits 

c. Certifying the competence of finance executives

d. Setting rules are standards for the independence auditors