The Reason Why Maximizing Share Value and Maximizing EPS Do

question 185

Multiple Choice

The reason why maximizing share value and maximizing EPS do not give the same optimal capital structure is because ________.

• A) EPS maximization does not consider risk
• B) share value maximization does not consider risk
• C) EPS maximization considers cash flows
• D) EPS maximization does consider risk

---

Definitions:

Restrictive Endorsement

A limitation placed on a check specifying the conditions under which it can be paid or transferred, often used for security purposes.

Pay To The Order

A phrase written on a financial instrument such as a check, indicating the person or entity to which the money is directed.

Bank

A financial institution licensed to receive deposits and make loans, and may offer various other financial services.

Negotiable

Capable of being discussed and terms arranged; a check is a negotiable instrument drawn against deposited funds to pay a specified amount to a person or business upon demand.