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.