19) Profit maximization as a goal is ideal because it directly considers ________. A) risk and book value of assets B) timing and cash flow C) timing and risk D) EPS and stock price.
20) Profit maximization as the goal of the firm is not ideal because ________. A) profits are only accounting measures B) cash flows are more representative of financial strength C) profit maximization does not consider risk D) profits today are less desirable than profits earned in future years
21) Which of the following is a measure of profit maximization to shareholders? A) the timing of returns B) earnings per share C) current assets D) market risk premium
22) The key variables in the owner wealth maximization process are ________. A) market risk premium and risk B) cash flows and risk C) risk-free rate and share price D) total assets and risk
23) Cash flows and risk are the key determinants in share price. Increased cash flow results in ________, other things remaining the same. A) a lower share price B) a higher share price C) an unchanged share price D) an undetermined share price
24) Cash flows and risk are the key determinants in share price. Increased risk, other things remaining the same, results in ________. A) a lower share price B) a higher share price C) an unchanged share price D) an undetermined share price
25) Financial managers evaluating decision alternatives or potential actions must consider ________. A) only risk B) only return C) either risk or return D) risk, return, and the impact on share price
26) An ethics program is expected to have ________ impact on a firm’s share price. A) a positive B) a negative C) no impact D) an unpredictable