Which of the Following Is NOT a Reason That a Firm

question 86

Multiple Choice

Which of the following is NOT a reason that a firm that maximizes profits may fail to maximize shareholder wealth.

• A)The timing of profits matters.Shareholders might prefer lower profits that arrive sooner.
• B)Risk matters.Shareholders are risk averse,so they prefer less risky investments that generate lower profits.
• C)Shareholder wealth depends on cash flow which is not the same as profit.
• D)If a firm maximizes profits by engaging in unethical business practices,it's stock price may be adversely affected.

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Definitions:

Personality Test Scores

Quantitative assessments derived from tests designed to measure various aspects of an individual’s personality traits and characteristics.

Fundamental Attribution Error

The inclination to attribute the actions of others more to their character traits than to the external situations influencing them, downplaying the impact of contextual circumstances.

Situational Constraints

External factors that restrict or dictate an individual's behavior, reducing freedom of action.

Underestimating

The act of judging something to be smaller or less important than it actually is, often leading to miscalculation or oversight.