Under Which of the Theories of Equity Is a Manager's

question 3

Multiple Choice

Under which of the theories of equity is a manager's goals considered as important as those of the common stockholder.

• A) Proprietary theory.
• B) Commander theory.
• C) Entity theory.
• D) Enterprise theory.

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Definitions:

EPS

Earnings per share. A firm’s earnings stated on a per-share outstanding basis. An important measure of business performance in the stock market.

Equity

Ownership interest in a company, represented by shares that entitle holders to a share of the company's profits.

Financial Leverage

The use of borrowed money to multiply financial performance in terms of ROE and EPS.

Shareholders

Individuals or entities that own shares in a corporation, giving them partial ownership and possibly a right to vote at shareholders' meetings.