What Should Be the Primary Operating Goal of a Publicly

question 39

Multiple Choice

What should be the primary operating goal of a publicly owned firm interested in serving its shareholders?

• A)maximize the stock price per share, which is the stock's intrinsic value, over the long run
• B)maximize the firm's expected EPS
• C)maximize the firm's expected total income
• D)maximize the stock price on a specific target date

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Definitions:

Transfer Payments

Payments made by the government to individuals, without requiring any service or goods in return, such as social security or unemployment benefits.

Imperfect Knowledge

A situation where all parties in an economic transaction do not possess full or equal information, leading to market failures or inefficiencies.

Return Investors

The profit or loss generated on an investment over a certain period of time, expressed as a percentage of the investment's initial cost.

Economic Profit

The difference between a firm's total revenue and its total economic costs, including both explicit and implicit costs.