Question S lowing is (are) a valid criticism of profit maximization as a goal fo
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Question S lowing is (are) a valid criticism of profit maximization as a goal for the fim? ng profits are not necessarily the same as cash flows. a) A ccounti )Profit maximization does not tell us when cash flows c) Profit d) All of the above. are received. maximization ignores the uncertainty or risk associated with cash flows. Question Which of the following is true? a) A risky dollar is worth less than a safe dollar. b) A risky dollar is worth more than a safe dollar c) A risky dollar is equivalent in value to that of a safe dollar. d) None of the above Question 10. Which of the following has the greatest potential for ageney problems between management and shareholders? a) Management owns 100 percent of the shares of the firm. b) Management owns 50 percent of the shares of the firm. c) Management owns 25 percent of the shares of the firm. d) Management owns no shares of the firm. Question 11 All of the following are external factors that influence the stock prices of the firm except a) legal constraints b) capital structure c) tax laws d) general level of economic activity e) conditions in the stock market Management may expropriate wealth from bondholders to shareholders through which of the following actions: a) take on new ventures with much greater risk than was anticipated by creditors. b) take on more debt to increase the returns to shareholders. c) issue more stock than was anticipated by creditors. d) answers a and b are correct. e) answers b and c are correct.Explanation / Answer
Answer 8: Option D. All of the above are true. Profit maximization does not tell us about timing , risk of money received in the business. It only concerns with max profit. Accounting profits differs from the profits depending up on the method used.
Answer 9: option A . Safe dollar always have more worth than risky dollar. this is the second basic principal of finance
Answer 10 : option D: In this managers of the company have no stake leading to less chances of them being concerned regarding the well being of the company
Answer11: option B is the answer. Capital structure depends on the company what they want to keep. how much debt and Equity to have. it can effect in terms of tax benefit if debt is taken.
Answer12: Option A is the answer. In new ventures company do investments which instead could be used to repay the bondholders early on
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