Principles of Finance I mini case QUESTIONS?

   Assignment "Chapter 13"

Principles of Finance I

Chapter 13

·         MINI CASE PAGE 544, DO ONLY a, b, c, h, i, j, k

a.       What is an agency relationship? When you first begin operations, assuming you are the only employee and only your money is invested in the business. Would ant agency conflicts exist? Explain your answer!

b.      If you expanded and hired additional people to help you, might that give rise to agency problems?

c.       Suppose your company raises funds from outside lenders, what type of agency costs might occur? How might lenders mitigate the agency costs?

h. List three provisions in the corporate charter that affect takeovers.

I. Briefly describe the use of stock options in a compensation plan. What are some potential problems with stock options as a form of compensation?

j. What is a block ownership? How does it affect corporate governance?

h. Briefly explain how regulatory agencies and legal system affect corporate governance!