The Assumption That the Maximization of Shareholder Value Equates to Long-Term

question 39

Multiple Choice

The assumption that the maximization of shareholder value equates to long-term maximization of profit, is justified partly by "simplicity" which means that:

• A)The battle between many stakeholders requires common goals
• B)to attempt to satisfy all multiple stakeholder goals would lead to managerial paralysis
• C)It allows a firm to have a single objective
• D)No one will ever be able to fully understand a firm's goals

---

Definitions:

Buying Division

A department within a company responsible for making purchases of goods and services needed by the organization.

Selling Division

A segment of a company specifically focused on sales and distribution of products or services.

Transfer Price

The price at which divisions of a company transact with each other, used for the transfer of goods and services within an organization.

Market Price

The current price at which an asset or service can be bought or sold in the marketplace, determined by the forces of supply and demand.