Which of the Following Statements Is CORRECT

question 41

Multiple Choice

Which of the following statements is CORRECT?

• A) A good goal for a firm's management is maximization of expected EPS.
• B) Most business in the U.S.is conducted by corporations, and corporations' popularity results primarily from their favorable tax treatment.
• C) Because most stock ownership is concentrated in the hands of a relatively small segment of society, firms' actions to maximize their stock prices have little benefit to society.
• D) Corporations and partnerships have an advantage over proprietorships because a sole proprietor is exposed to unlimited liability, but the liability of all investors in the other types of businesses is more limited.
• E) The potential exists for agency conflicts between stockholders and managers.

---

Definitions:

Production and Consumption

The processes of creating goods and services (production) and using them to satisfy needs and desires (consumption).

Holiday Lighting

The practice of installing lights and other decorative lighting during holidays; not inherently economic but can involve significant expenditure and economic activity.

Negative Externalities

Costs suffered by a third party as a result of an economic transaction.

Government Tax

is a compulsory financial charge or levy imposed by a government on individuals or corporations to fund public expenditures.