When a Stockholder's Stake Is Worthless the Firm Runs the Risk

question 75

Multiple Choice

When a stockholder's stake is worthless the firm runs the risk of:

• A)underinvestment because there isn't much capital for investment.
• B)overinvestment because there isn't much wealth at risk.
• C)having bondholders invoke the separation principle to obtain first rights on the firm's assets.
• D)none of these.

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Definitions:

Self-Esteem

An individual's subjective evaluation of their own worth, including beliefs about oneself.

Object Relations

A school of psychodynamic thought that emphasizes the real (as opposed to fantasized) relations an individual has with others.

Conditional Positive Regard

Acceptance and love that are contingent upon a person's behaving in certain ways or meeting certain conditions.

Self-Actualization

According to Abraham Maslow and some other adherents of the humanistic approach to personality, the full realization of one’s potential.