Financial Managers Should Strive to Maximize the Current Value Per

question 54

Multiple Choice

Financial managers should strive to maximize the current value per share of the existing stock because:

• A) Doing so guarantees the company will grow in size at the maximum possible rate.
• B) Doing so increases the salaries of all the employees.
• C) They have been hired for the purpose of representing the interest of the current shareholders.
• D) Doing so means the firm is growing in size faster than its competitors.
• E) The managers often receive shares of stock as part of their compensation.

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Definitions:

Job Cuts

A reduction in the number of employees typically due to financial strains or organizational restructuring.

Scanlon Plan

A type of gainsharing program that rewards employees for improvements in productivity and cost savings within a company.

Gainsharing Plan

An incentive strategy that rewards employees for contributing to the company's productivity improvements by sharing the resultant financial gains.

Profit-Sharing Plan

A company-wide program that provides employees with a share in the profits of the company, typically based on its quarterly or annual earnings.