Corporate Managers Can Maximize Shareholder Wealth by Choosing Positive NPV

question 27

Multiple Choice

Corporate managers can maximize shareholder wealth by choosing positive NPV projects because:

• A) all investors have the same preferences.
• B) the unhappy shareholders can sell off shares.
• C) the separation theorem in financial markets states that all investors will be satisfied with the same investment decision regardless of personal preferences.
• D) managers are wiser than shareholders regarding investments.

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Definitions:

Rubber Hoses

Flexible tubes constructed from rubber used for conveying liquids or gases under pressure.

Task Variety

The degree to which a job includes a variety of different activities requiring different skills and talents.

Job Rotation

A method of employee development where individuals periodically move through a variety of positions or jobs to gain broad experience.

Job Design Strategy

The process of defining how work will be performed and what tasks will be required in a given job to improve productivity and employee satisfaction.