Profit Maximization Does Not Adequately Describe the Goal of the Firm

question 7

Multiple Choice

Profit maximization does not adequately describe the goal of the firm because

• A) profit maximization does not require the consideration of risk.
• B) profit maximization ignores the timing of a project's return.
• C) maximization of dividend payout ratio is a better description of the goal of the firm.
• D) A and B.

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Definitions:

Liquidate Positions

The process of selling securities or other assets to convert them into cash, often done to exit a market or meet financial obligations.

Money Market Mutual Funds

Mutual funds that invest in short-term, high-quality debt securities and are designed to offer investors liquidity and a safe place to invest in the short term.

Commercial Paper

Short-term unsecured debt issued by large corporations.

CDs

Certificates of Deposit, a type of time deposit at banks and financial institutions offering a fixed interest rate over a fixed period.