Financial Decisions Should Be Consistent with the Goal of Shareholder

question 58

Multiple Choice

Financial decisions should be consistent with the goal of shareholder wealth maximization. However, there may be a divergence between shareholder wealth maximization and the actual goals of management. The primary reason for this is which of the following?

• A) Management wants to ensure good public relations.
• B) The Board of Directors is becoming increasingly uninvolved within the corporation.
• C) Shareholders do not feel that wealth maximization is relevant.
• D) There is a separation of ownership and control in corporations.

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Definitions:

Separately Excited

Describes an electrical circuit or device (typically in motors or generators) where the primary and the excitation circuits are electrically isolated from each other.

Compound

A substance formed from two or more elements chemically united in fixed proportions, often exhibiting properties different from those of the individual elements.

Electric Energy

Electric energy is the form of energy generated by the movement of electrons through conductors, and it can be used for a variety of applications including lighting, heating, and powering motors.

Commutator Segments

Sections of a commutator, which is a device used in electric motors and generators to reverse the direction of current.