The Primary Operating Goal of a Publicly-Owned Firm Trying to Best

question 8

Multiple Choice

The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to

• A) Maximize managers' own interests,which are by definition consistent with maximizing shareholders' wealth.
• B) Maximize the firm's expected EPS,which must also maximize the firm's price per share.
• C) Minimize the firm's risks because most stockholders dislike risk.In turn,this will maximize the firm's stock price.
• D) Use a well-structured managerial compensation package to reduce conflicts that may exist between stockholders and managers.
• E) Since it is impossible to measure a stock's intrinsic value,the text states that it is better for managers to attempt to maximize the current stock price than its intrinsic value.

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Definitions:

Test Condition

A specific scenario under which tests are designed and executed to evaluate the functionality of a software application.

PDLC

Stands for Polymer Dispersed Liquid Crystal, a technology used in smart glass that changes its opacity when an electrical current is applied.

Natural Language

Human languages that have evolved naturally over time, as opposed to artificial or constructed languages.

Flowchart Shape

A symbol used in flowcharts to represent a specific type of action or step in a process.