In: Finance
Which of the following actions should a firm take to ensure it is attaining its primary its primary goal of maximizing value?
a. Maximize the dividends paid to common stockholders.
b. Maximize the price of the firm's stock.
c. Maximize the book value per share of the common stock.
d. Maximize its earning per hare (EPS).
The asnwer is
b. Maximize the price of the firm's stock.
Value = Price*Number of shares
Maximizing shareholders' value is the primary objective of every firm
Hence, price is to be maximized
All others are secondary goals