Per the Shareholder Wealth Maximization Goal, Management Should Seek to Maximize

question 17

Multiple Choice

Per the shareholder wealth maximization goal, management should seek to maximize the ____ of the ____ to owners.

• A) present value; expected pretax cash flows
• B) future value; expected pretax cash flows
• C) present value; expected future returns
• D) future value; expected future returns

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Definitions:

Nonsystematic Standard Deviation

A measure of variance in a portfolio's total returns attributable to factors specific to individual securities, as opposed to the market.

Equally-Weighted Portfolio

An equally-weighted portfolio is an investment strategy that gives the same weight, or importance, to each asset in the portfolio, regardless of the size or market value of the companies.

Securities

Securities that signify either an equity stake in a corporation that is publicly traded, a debt interest in a company or government entity, or ownership rights as delineated by an option.

HML Beta

A measure used in finance to assess the sensitivity of an asset or portfolio to a value factor, defined as high minus low book-to-market stocks.