financial management overview8

financial management overview8 - Corporate goals and...

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Corporate goals and control Answer: e Diff: M i . Which of the following statements is most correct? a. The proper goal of the financial manager should be to maximize the firm’s expected cash flow, because this will add the most wealth to each of the individual shareholders (owners) of the firm. b. One way to state the decision framework most useful for carrying out the firm’s objective is as follows: “The financial manager should seek that combination of assets, liabilities, and capital that will generate the largest expected projected after-tax income over the relevant time horizon.” c. The riskiness inherent in a firm’s earnings per share (EPS) depends on the characteristics of the projects the firm selects, which means it depends upon the firm’s assets, but EPS does not depend on the manner in which those assets are financed. d. Since large, publicly-owned firms are controlled by their management teams, and typically, ownership is widely dispersed, managers have great freedom in managing the firm. Managers may
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This note was uploaded on 08/04/2011 for the course COMM 101 taught by Professor Sy during the Spring '11 term at USC.

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financial management overview8 - Corporate goals and...

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