Normally,owners of Firms Should Try to Induce Their Managers to Care

question 22

Multiple Choice

Normally,owners of firms should try to induce their managers to care:

• A) solely about output.
• B) about profits and output.
• C) solely about profits.
• D) None of the statements associated with this question is correct.

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Definitions:

Discount Rate

The interest rate used to determine the present value of future cash flows.

Capital Projects

Long-term investment projects requiring significant sums of money to acquire, improve, or maintain physical assets.

Riskless Assets

Financial instruments that are considered to have a minimal risk of loss, often exemplified by government bonds or Treasury bills.

Risky Asset

An asset that has a significant degree of uncertainty in its future returns, including the possibility of losing some or all of the original investment.