Which of the Following Statements Regarding Institutional Investors Is Accurate

question 91

Multiple Choice

Which of the following statements regarding institutional investors is accurate?

• A) Institutional investors tend to be more interested in maximizing the short-term value of their portfolios than in the long-term performance of firms in those portfolios.
• B) High levels of institutional ownership are negatively related to the level of R&D in a firm.
• C) High levels of institutional ownership have a strong, positive relationship with the level of R&D in a firm.
• D) High levels of institutional ownership lead firms to sell strategically unrelated businesses.

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Definitions:

MC

Refers to Marginal Cost, the extra cost incurred from producing one more unit of a good or service.

Profit-Maximizing

Profit-Maximizing refers to the point at which a firm achieves the highest possible profit through the manipulation of production or pricing strategies.

MR = MC

A condition in economics where marginal revenue equals marginal cost, often considered the point of profit maximization for firms in perfectly competitive markets.

Short Run

A period in which at least one factor of production is fixed, limiting the ability of firms to adjust to market changes.