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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