A Manager Should Attempt to Maximize the Value of the Firm

question 34

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 benefits to inside management.
• C)changing the capital structure if and only if the value of the firm increases only to the benefits 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:

Defense Mechanism

Psychological strategies brought into play by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety and unacceptable impulses.

Denial

A defense mechanism in which confrontation with a personal problem or with reality is avoided by denying the existence of the problem or reality.

Thematic Apperception Test (TAT)

A projective test consisting of drawings of ambiguous human situations, which the test taker describes; thought to reveal inner feelings, conflicts, and motives, which are projected onto the test materials.

Diagnostic Tool

An instrument or technique used to identify the nature or cause of a condition, disorder, or disease.