Which One of the Following Is a Criticism of Equating

question 58

Multiple Choice

Which one of the following is a criticism of equating the goals of maximising the ROE of a company and maximising the company's shareholder wealth?

• A) ROE is based on after-tax earnings, not cash flows.
• B) ROE does not consider risk.
• C) ROE ignores the size of the initial investment as well as future cash flows.
• D) All of the above are criticisms of ROE as a goal.

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Definitions:

Joined Families

Refers to families that come together through marriage, adoption, or other situations, blending members from two or more previously separate family units.

Confronting Challenges

The process of facing and seeking solutions to obstacles or difficulties.

Delabeling

The process of removing or challenging negative or stigmatizing labels associated with individuals or groups.

Attributing Blame

The process of assigning responsibility for a fault or wrong to a person or group.