Financial Managers Should Strive to Maximize the Current Value Per

question 19

Multiple Choice

Financial managers should strive to maximize the current value per share of the existing stock because:

• A) doing so guarantees the company will grow in size at the maximum possible rate.
• B) doing so increases the salaries of all the employees.
• C) the current stockholders are the owners of the corporation.
• D) doing so means the firm is growing in size faster than its competitors.
• E) the managers often receive shares of stock as part of their compensation.

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Definitions:

Barter System

An ancient method of exchange where goods and services are traded directly for other goods and services without using money.

Trade

The exchange of goods, services, or both between two or more parties, either within a country or across international borders.

Commodity Money

Anything that serves both as money and as a commodity; money that has intrinsic value such as gold or silver coins.

Double Coincidence

A situation in a barter system where two parties each hold an item the other wants, necessitating an exact match to complete an exchange.