Which of the Following Statements Is CORRECT

question 17

Multiple Choice

Which of the following statements is CORRECT?

• A) A good goal for a firm's management is maximization of expected EPS.
• B) Most business in the U.S.is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.
• C) Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.
• D) Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
• E) The potential exists for agency conflicts between stockholders and managers.

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Definitions:

Reciprocity Norm

A social norm that expects individuals to respond to each other in kind, returning benefits for benefits and responding with either indifference or hostility to harms.

Free Samples

Small quantities of a product given to consumers at no cost to introduce the product and encourage future purchasing.

Mere Exposure Effect

A mental occurrence where individuals tend to favor items or concepts simply because they recognize or are accustomed to them.

Just-World Phenomenon

The belief that the world is fundamentally fair, leading people to rationalize injustice or misfortune as deserved by the victims.