Which of the Following Statements Best Describes Corporate Goals

question 59

Multiple Choice

Which of the following statements best describes corporate goals?

• A)The proper goal of the financial manager should be to attempt to maximize the firm's expected cash flows, because this will add the most to the wealth of the individual shareholders.
• B)The financial manager should seek that combination of assets, liabilities, and capital that will generate the largest expected projected after-tax income over the relevant time horizon, generally the coming year.
• C)The riskiness inherent in a firm's earnings per share (EPS) depends on the characteristics of the projects the firm selects, and thus on the firm's assets. However, EPS is not affected by the manner in which those assets are financed.
• D)Potential agency problems can arise between shareholders and managers, because managers hired as agents to act on behalf of the owners may instead make decisions favourable to themselves rather than the shareholders.

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Definitions:

Abstract Concepts

Mental representations of ideas or principles that do not have a physical presence but are understood through thought and knowledge.

Spatial Concepts

The understanding and cognitive processing of how objects or features are located in space relative to one another.

Visual Relationships

The way visual elements are perceived in relation to each other and the overall composition in a visual field.

Relational-Organizational Hypothesis

The theory that complex information is remembered better when it is organized in a meaningful relational manner.