In: Finance
Profit maximization does not adequately describe the goal of the firm because
I. |
profit maximization does not require the consideration of risk |
|
II. |
profit maximization considers the timing of a project's return |
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III. |
maximization of dividend payout ratio is a better description of the goal of a firm |
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IV. |
both I and II |
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V. |
None of the above |
Which of the following goals of the firm are synonymous
(equivalent) to the maximization of shareholder wealth?
I. profit maximization
II. risk minimization
III. maximization of the total market value of the firm's common
stock
IV maximization of market price per share
I. |
I and II only |
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II. |
II and III only |
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III. |
III and IV only |
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IV. |
I and III only |
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V. |
I and IV only |
The true owners of the corporation are the
I. |
holders of debt issues of the firm |
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II. |
none of the above |
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III. |
common stockholders |
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IV. |
board of directors |
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V. |
preferred stockholders |
Ms Tamika, a financial manager of a corporation, is considering numerous different operating strategies for the coming year. From a financial management standpoint, which of the following would be her optimal strategy?
I. |
To undertake the plan that would be of least risk to the firm |
|
II. |
To undertake the plan that would maximize the current price of existing stock |
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III. |
To undertake the plan that would result in a profit for the year |
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IV. |
To undertake the plan that would be least expensive for the firm |
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V. |
None of the above |
Which of the following categories of owners enjoy limited liability?
I. |
general partners in a limited partnership |
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II. |
None of the above. |
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III. |
shareholders (common stock) of a corporation |
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IV. |
sole proprietors |
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V. |
both a and b |
Which of the following Mechanisms is used by shareholders to motivate management?
I. |
Threat of Firing |
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II. |
Leveraged Buyouts |
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III. |
Managerial Compensation |
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IV. |
Threat of Firing and Managerial Compensation |
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V. |
None of the above |