A Manager Should Attempt to Maximize the Value of the Firm

question 37

Multiple Choice

A manager should attempt to maximize the value of the firm by changing the capital structure if and only if the value of the firm increases:

• A)as a result of the change.
• B)to the sole benefit of the managers.
• C)to the sole benefit of the debtholders.
• D)while also decreasing shareholder value.
• E)while holding stockholder value constant.

---

Definitions:

Pleasure

A state of feeling pleased or satisfied, often resulting from the fulfillment of a desire or need.

Synonymous

Having the same or nearly the same meaning as another word or phrase in the same language.

Maximize Utility

The economic principle aiming to achieve the highest satisfaction possible from consumption given limited resources.

Allocate Money Income

The process of distributing financial resources among different uses to satisfy various needs and desires.