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Questions and Answers
What concept focuses on increasing the market value of a company's shares over time?
What concept focuses on increasing the market value of a company's shares over time?
- Shareholder wealth maximization (correct)
- Profit maximization
- Revenue growth
- Operating efficiency
Which of the following issues arises due to conflicting interests between shareholders and management?
Which of the following issues arises due to conflicting interests between shareholders and management?
- Agency problem (correct)
- Insider trading
- Market inefficiencies
- Financial leverage
What term describes the costs incurred to align the interests of management with those of shareholders?
What term describes the costs incurred to align the interests of management with those of shareholders?
- Operational costs
- Liquidity costs
- Agency costs (correct)
- Equity financing costs
What strategy can firms use to mitigate the effects of the agency problem?
What strategy can firms use to mitigate the effects of the agency problem?
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In the context of profit maximization, which of the following statements is least aligned with shareholder interests?
In the context of profit maximization, which of the following statements is least aligned with shareholder interests?
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