For shareholder value to be created, a business must:
A) Sell its products in product markets for more than they cost to produce
B) Borrow from lenders at a cost that is lower than the cost of capital
C) Generate profits in product markets that exceed the cost of capital in capital markets
D) Generate profits in capital markets that exceed the cost of capital in product markets

Question

Quizplus · Accepted Answer

Shareholder value is created when a business generates profits that exceed the cost of capital, meaning the returns from product markets are greater than the costs incurred in capital markets.

For Shareholder Value to Be Created, a Business Must