Which of the Following Is True of the Stakeholder Theory

question 12

Multiple Choice

Which of the following is true of the stakeholder theory?

• A)It assumes that non-financial stakeholders do not have a stake in the financial health of the firm.
• B)It states that some firms will not choose to borrow when lenders are willing to provide debt financing at attractive terms.
• C)It states that the presence of debt increases a firm's profits even if there is no probability of new investment opportunities.
• D)It states that financial distress should be more costly for firms that sell non-durable goods.

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Definitions:

Leader

An individual who guides or directs a group towards achieving certain goals or objectives, often by inspiring or influencing others.

Follower

An individual who supports and is guided by another person or by a group or organization.

Implicit Followership Prototype

A subconscious set of expectations about the behaviors and characteristics that define an ideal follower within a group or organizational context.

Incompetence

The lack of necessary skills, knowledge, or ability to perform a task or job effectively, often leading to substandard outcomes or failure.