A Major Conflict of Interest Between Top Executives and Owners

question 135

Multiple Choice

A major conflict of interest between top executives and owners, is that top executives wish to diversify the firm in order to ____, while owners wish to diversify the firm to ____.

• A) generate free cash flows, reduce the risk of total firm failure
• B) increase the price of the firm's stock, increase the dividends paid out from free cash flows
• C) reduce the risk of total firm failure, reduce their total portfolio risk
• D) reduce their employment risk, increase the company's value

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Definitions:

Traditional Music Industry

Refers to the sector of the music industry that revolves around the production, distribution, and sale of physical music formats and the traditional methods of music consumption before the digital era.

Cultural Selection

The process by which some cultural practices are adopted and spread within a society, while others are not, influenced by factors like utility, popularity, or symbolic meaning.

Product Selection

The process of choosing goods or services from a set of alternatives based on criteria such as quality, price, and personal preferences.

Winnowing-Out Process

The method by which decisions are made by successively eliminating less suitable alternatives.