The Primary Operating Goal of a Publicly-Owned Firm Interested in Serving

question 20

Multiple Choice

The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to

• A) Maximize its expected total corporate income.
• B) Maximize its expected EPS.
• C) Minimize the chances of losses.
• D) Maximize the stock price per share over the long run,which is the stock's intrinsic value.
• E) Maximize the stock price on a specific target date.

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Definitions:

Zero Growth Stock

A stock in a company which is not expected to experience any growth in dividends or earnings and typically pays a high dividend yield.

Required Rate

The minimum return that investors expect or the company estimates it needs to generate from a capital investment or project to consider it viable.

Maximum Price

The highest price that a trader, investor, or consumer is willing to pay for a security or good.

Required Rate

The minimum expected rate of return on an investment, set by investors based on risk levels and economic conditions.