1(a) In this case, the front desk receptionist that overtaking of lunch time to run personal errands is being

compensated for unproductive time and will cause the company faces losses. The overtime of the receptionist will cause work schedule of colleagues been confounded and will lead to the problem of no enough manpower in front desk and the company has to pay someone to take her place during her absence. This will make the customers waiting for a long time and not satisfied with the services provided. By short of firing the receptionist can dealt this problem. To make sure the company act and rules will be comply fully by all staff, the laid off of the receptionist or reducing the cost to the firm by reducing her pay for the lost work by the company can as an example to other staff by execute one as a warning to other. Hence, no staff will make this mistake again and company can avoid from unnecessary losses.

1(b) In this case, the action of managers will make the incorrect information to be used by others and the companys profits reflect the error. The costs to the firm are in the form of opportunity costs. Money that padding to cover the imbalance costs of this project are not available to fund other projects which may help to increase shareholder wealth only. In the long-run period, this will cause other managers or company makes a wrong decision on planning and launching project that will cause a loss. The company also will be charged by tax inspection officer on reporting incorrect financial statements. The company should deal this problem by short of firing those division managers. This can make an example for the whole company staff about the important of has a high integrity and noble moral characteristic in doing their job. In the other way, a management reward system based on how close and adequate of the managers estimates comes to the actual cost also a better solution.

1(c) The chief executive officer of the firm that told the competitor about the plan of merger was leaked the top secret of the firm. The competitor will request for a better conditions to the firm to lure them to give up previously planned and merger with them. Besides, the manager also may negotiate a better deal with the merging competitor which is beneficial to the chief executive officer himself and then sell the firm for less than its fair market value. Hence, the overall plan will be wreck and the firm will waste and loses in both finance and human power resources. To solve this problem, the firm may short of firing the CEO to make sure the company wont face losses. Besides, open the firm up for purchase bids from other firm is a good way to reduce the loss of shareholder wealth.

1(d) In this case, the branch manager which the bonus is based on profitability used the part-time or temporary workers to replace the experienced full-time employees and staffs customer service positions to lower employment costs and raise this years branch profit. Mostly, part time or temporary workers are not as productive as full-time and experienced employees. They have not been on the job as long to increase their work efficiency and normally better employees need to be highly compensated for their skills. This manager is getting rid of the highest cost employees to increase the profits. Besides short of firing the branch manager, other way to reducing this problem is give the manager performance shares to those that meet certain stated goals and set management compensation to share price would also encourage the manager to retain quality of employees.

2. A financial institution is an institution that provides financial services for its clients or members. Mostly the most important financial service provided by financial institutions is acting as financial intermediaries in financial market. They are responsible for transferring funds from investors to companies that need of those funds and facilitate the flow of money through the economy. A financial market is a market in which people and entities can trade financial securities, commodities, and other fungible items. Without financial markets, borrowers would have difficulty finding lenders themselves. The process of raising capital about RM10 million will be easier from financial institutions compare to financial market. This is because financial institutions often channel their investments and obtain needed financing through the financial markets as their role as a financial intermediaries in financial market.

3. Money markets and capital markets are parts of financial markets. The money market is a financial relationship between the suppliers and demanders of short-term debt securities such as assets involved in short-term borrowing, lending, buying and selling that maturing in one year or less and the trading is done over the counter and is wholesale. The capital market is a financial relationship created by a number of institutions and arrangements that allows the suppliers and demanders of long-term funds with maturities greater than one year to make transactions. The firm that are looking for the raising of short term finance or loans that are expected to be paid back as early as overnight can issue securities in the money markets. Whereas, for those firms that looking for raising of long term finance, such as the purchase of shares, or for loans that are not expected to be fully paid back for at least a year can issue securities in the capital markets.

4. There will be some ethical issues might arise when a corporate insider wants to buy and sell shares in the firm where he or she works. There are certain blackout periods where a person with inside knowledge cannot buy or sell any shares in the firm where he or she works. This is to keep everything and transactions in fair. It can prevent that person from artificially increasing his net worth or profits and wealth more than other investors because he has knowledge those others doesnt have. Besides, the same conditions will happen if something bad happens. It can prevent him or her from selling out the shares before the bad news spread and become public and this can help to lowering his or her loss more than other investors that don't have this information.

5. All stockholders are stakeholders, but all stakeholders arent stockholders. Stockholders are those own part of a company and they are entitled to income in the form of dividends and they are also elect directors who run the company. Whereas, stakeholders are groups of people who have an interest in how the firm is run. These include stockholders, employees, management, creditors and customers among others that interested in the firms operation and profitability for its own reasons.

6. Proprietorship is a type of business entity that is owned and run by one individual only and there is no legal distinction between the owner and the business whereas a partnership is an arrangement where more than one parties agree to cooperate together to advance their mutual interests. A corporation is a separate legal entity that has been incorporated through a registration process established through legislation and has legal rights and liabilities that are distinct from their employees and shareholders. There is much proprietorship and partnerships that are remaining on their natural business instead of become corporations. However, if a proprietorship and partnerships business is willing to grow, it is probably will thrive and turn the film as a corporation to enjoy a better access to capital, limited liability, easy transferability and unlimited life.

7. Agency costs are the costs of monitoring the firm to make sure that firm managers take effort or act in shareholders interests, bonding and show to shareholders that they are acting in their best interest, and remnant loss. The losses will happen because managers did not make decisions in the best interests of shareholders. Agency cost means to any time a decision is made but does not maximize shareholder wealth and there is a conflict between what parties concerned with what a firm think. Conflicts will happen between all level of film, not only inside but also outside of a film. Agency cost tends to increase as the firm grows larger. This is because there firm is become larger, hence more diverse body of shareholders need to satisfy and more conflict will happen between the members of the film in protect their wealth.

8. In this case, the manager of Enron Corporation simply changes an accounting policy that will increase the reported to triggering his bonus which the change in profits will reverse itself in the next year and there are no impact on Enron's cash flow with the accounting changes. Hence, an agency problem will exists when the manager of Enron Corporation acts in his or her own self-interest instead of acts in the best interests of the shareholders. To reduce these agency problems, the management activity should be monitored. A bonus based on profits can be given to manager to encourage the manager to focus on profits and a better compensation such as stock options for managers, direct stock ownership by managers, or performance incentives also can be given to manager. In the issue on efficient markets, stock values are based on cash flows but not profits and others would expect the increase in profits will have effect on the company's stock price. In this case, the stock price will go down because the company's cash flows have not increased but the company still has to pay higher compensation to the manager.