Assignment Fn
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ASSIGNMENT
| * The assignment must be submitted on 10 June 2013 (Monday) by 1300 in hard copy form. * Standard format: Times New Roman, font size of 12, 1.5 spacing, one-inch margins, simple staple binding and use standard cover. * Please state your tutor’s name and tutorial group on the front cover.
Question:
1. Explain why each of the following situations is an agency problem what costs to the firm might result from it. Suggest how the problem might be dealt with short of firing the individual(s) involved. (a) The front desk receptionist routinely takes an extra 20 minutes of lunch time to run personal errands. (5 marks) (b) Division managers are padding cost estimates so as to show short-term efficiency gains when the costs come in lower than the estimates. (3 marks) (c) The firm’s chief executive officer has had secret talks with a competitor about the possibility of a merger in which she would become the CEO of the combined firms. (3 marks) (d) A branch manager fires experienced full-time employees and staffs customer service positions with part-time or temporary workers to lower employment costs and raise this year’s branch profit. The manager’s bonus is based on profitability. (6 marks)
2. You are the chief financial officer (CFO) of Gangnam Style, an edgy fashion design firm. Your firm needs RM10 million to expand production. How do you think the process of raising this money will vary if you raise it with the help of a financial institution versus raising it directly in the financial markets?
ASSIGNMENT
| * The assignment must be submitted on 10 June 2013 (Monday) by 1300 in hard copy form. * Standard format: Times New Roman, font size of 12, 1.5 spacing, one-inch margins, simple staple binding and use standard cover. * Please state your tutor’s name and tutorial group on the front cover.
Question:
1. Explain why each of the following situations is an agency problem what costs to the firm might result from it. Suggest how the problem might be dealt with short of firing the individual(s) involved. (a) The front desk receptionist routinely takes an extra 20 minutes of lunch time to run personal errands. (5 marks) (b) Division managers are padding cost estimates so as to show short-term efficiency gains when the costs come in lower than the estimates. (3 marks) (c) The firm’s chief executive officer has had secret talks with a competitor about the possibility of a merger in which she would become the CEO of the combined firms. (3 marks) (d) A branch manager fires experienced full-time employees and staffs customer service positions with part-time or temporary workers to lower employment costs and raise this year’s branch profit. The manager’s bonus is based on profitability. (6 marks)
2. You are the chief financial officer (CFO) of Gangnam Style, an edgy fashion design firm. Your firm needs RM10 million to expand production. How do you think the process of raising this money will vary if you raise it with the help of a financial institution versus raising it directly in the financial markets?