Which of These Is a Reason Why Achieving the Maximum

question 49

Multiple Choice

Which of these is a reason why achieving the maximum possible profit in a particular year may not be in the best interests of a business?

• A)Concentrating on the short-term may have detrimental effects in the long-term.
• B)It may be achieved by causing environmental problems, which give the business a bad reputation.
• C)If it is achieved with high-risk strategies, such as excessive reliance on borrowings, it could lead to disaster in the longer term.
• D)All of the above.

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Definitions:

Board of Directors

A group of individuals elected to represent shareholders and make major decisions concerning the corporation, including company policy, and director oversight.

Preferred Shares

Preferred shares represent ownership in a company with preferential rights to dividends and assets upon liquidation, compared to common shares.

Doctrine of Ultra Vires

A principle stating that actions taken by a corporation that are beyond its legal power or authority are invalid.

Duty of Loyalty

An obligation to act in the best interest of another party, typically in fiduciary relationships.