Why Should Financial Managers Strive to Maximize the Current Value

question 6

Multiple Choice

Why should financial managers strive to maximize the current value per share of the existing stock?

• A)doing so guarantees the company will grow in size at the maximum possible rate
• B)doing so increases employee salaries
• C)because they have been hired to represent the interests of the current shareholders
• D)because this will increase the current dividends per share
• E)because managers often receive shares of stock as part of their compensation

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Definitions:

Voidable Title

A title to goods that is valid until annulled or rescinded due to certain conditions, such as fraud or misrepresentation.

Good-faith Purchaser

indicates a person who buys property without knowledge of any circumstances which would make the purchase dishonest or unfair.

Void Title

A title to property or an asset that is invalid from the start and has no legal effect.

Merchant

an individual or business that is involved in the trading of goods, services, or commodities for profit.