A Manager Should Attempt to Maximize the Value of the Firm

question 81

Multiple Choice

A manager should attempt to maximize the value of the firm by:

• A) changing the capital structure if and only if the value of the firm increases.
• B) changing the capital structure if and only if the value of the firm increases to the benefit of inside management.
• C) changing the capital structure if and only if the value of the firm increases only to the benefits of the debtholders.
• D) changing the capital structure if and only if the value of the firm increases although it decreases the stockholders' value.
• E) changing the capital structure if and only if the value of the firm increases and stockholder wealth is constant.

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Definitions:

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The effects that financial or legal decisions have on one's taxes owed to the government.

Bankruptcy Code

The set of laws codified under Title 11 of the United States Code, governing bankruptcy proceedings in the U.S.