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.

---

Definitions:

Manufacturer

A company that produces finished goods from raw materials in a process involving machinery, labor, and assembly.

Specifications

Detailed descriptions of the materials, dimensions, and quality standards of a product, allowing it to meet customer expectations and regulatory requirements.

Organizational Buyers

Entities such as businesses, governments, and institutions that purchase goods and services for use in production, operations, or resale.

Flexibility

The ability to adapt and respond to changing conditions or requirements, often considered a valuable trait in various contexts.