Which Three of the Following Are Reasons Why a Firm

question 27

Multiple Choice

Which three of the following are reasons why a firm should use external finance to maximise shareholder wealth?

• A) The shareholders own the firm.
• B) This approach encourages high levels of motivation in managers.
• C) It counters the tendency for management to pursue goals for their own benefit.
• D) To survive in a competitive world.

---

Definitions:

Summarizing

The act of briefly presenting the main points or essence of a longer text or speech in a concise form.

Paraphrasing

the act of expressing the meaning of something written or spoken using different words, especially to achieve greater clarity.

Critical Value

A cutoff point on a test statistic at or beyond which the null hypothesis is rejected in favor of the alternative hypothesis.

Hypothesis Test

A statistical method used to determine whether there is enough evidence to reject a null hypothesis in favor of an alternative hypothesis.