Shareholder Value and Value-Based Management Quiz
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Questions and Answers

What is the primary goal for a company according to the concept of shareholder value?

  • Maximizing revenue generation
  • Minimizing operational costs
  • Increasing the wealth of its shareholders (correct)
  • Expanding market reach

    • What does the term 'shareholder value' refer to?

  • Operational efficiency of a company
  • Market capitalization of a company (correct)
  • Employee satisfaction within a company
  • Total revenue generated by a company

    • According to the concept of shareholder value, what should planned actions by management and the returns to shareholders do?

  • Outperform certain benchmarks such as the cost of capital (correct)
  • Satisfy all stakeholder expectations
  • Minimize the cost of capital
  • Meet certain benchmarks such as employee satisfaction

    • Who introduced the specific concept that shareholders' money should be used to earn a higher return than they could earn themselves by investing in other assets of the same risk?

    <p>Alfred Rappaport</p> Signup and view all the answers

    What principle became prominent during the 1980s and 1990s along with the concept of shareholder value?

    <p>Value-based management</p> Signup and view all the answers

    According to the concept of shareholder value, what is the primary goal for a company?

    <p>Increasing the wealth of its shareholders by paying dividends and/or causing the stock price to increase</p> Signup and view all the answers

    What does the term 'shareholder value' refer to?

    <p>Increasing the wealth of its shareholders by paying dividends and/or causing the stock price to increase</p> Signup and view all the answers

    Who introduced the specific concept that shareholders' money should be used to earn a higher return than they could earn themselves by investing in other assets of the same risk?

    <p>Alfred Rappaport</p> Signup and view all the answers

    What principle became prominent along with the concept of shareholder value during the 1980s and 1990s?

    <p>Value-based management</p> Signup and view all the answers

    In essence, according to the concept of shareholder value, what should planned actions by management and the returns to shareholders do?

    <p>Outperform certain benchmarks such as the cost of capital concept</p> Signup and view all the answers

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