Profit-Making Firms Are About Creating Value

question 39

Multiple Choice

Profit-making firms are about creating value:

• A)this value is simply the profit generated at the end of the year.
• B)they must create value for several stakeholder groups if this is to result in sustainable long-term profit generation.
• C)value to some stakeholders (e.g. customers)may be difficult to quantify in money terms.
• D)both c and b.

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Definitions:

Debt Instrument

A debt instrument is a document or contract representing a loan made by an investor to a borrower, specifying terms of repayment and interest.

Equity Investment

Funds invested in a company by purchasing shares of its stock, representing ownership interest.

Derivative

A derivative is a financial security with a value that is reliant upon or derived from, an underlying asset or group of assets—such as stocks, bonds, commodities, currencies, interest rates, or market indexes.

Equity Contracts

Agreements that represent ownership interest in a corporation, potentially including options, warrants, and other financial instruments.