A Company's Value Statement and Code of Ethics

question 74

Multiple Choice

A company's value statement and code of ethics

• A)help to mold the culture and communicate what kinds of actions and behaviors are expected of all company personnel.
• B)help prevent it from coming across to customers and the general public as greedy.
• C)serve the valuable purpose of making its suppliers hesitant to engage in business practices that are unethical.
• D)are the most important factors determining its reputation with customers, suppliers, employees, shareholders, and society at large.
• E)should always be made a prominent and visible part of the company's strategic intent and strategy.

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Definitions:

Probability Distributions

Mathematical functions that describe all the possible values and likelihoods that a random variable can take within a given range.

Cost of Capital

The cost of funds used for financing a business, calculated as the weighted average of debt and equity costs.

Capital Budgeting

The process of evaluating and selecting long-term investments that are in line with the firm's goal of wealth maximization.

Real Option

The ability to take a course of action that under certain circumstances leads to a benefit. The circumstances that make the action desirable are uncertain, and maintaining the ability to take it requires expenditures before that uncertainty is resolved. Hence, bearing the preliminary cost gives one the option of taking an action in the future that may or may not turn out to be desirable.