________ maximization is achieved when a company manages its business in such a way that its cash flows over time,discounted at the appropriate discount rate,will cause the value of the company's common stock to be at a maximum.
A)Profit
B)Stockholder wealth
C)Asset
D)None of the above

Question

Quizplus · Accepted Answer

The concept described in the question is known as stockholder wealth maximization, which focuses on maximizing the value of the company's common stock for its shareholders. This is achieved by managing the business in a way that generates strong cash flows over time, which are then discounted to determine the present value of the firm. By maximizing this present value, the company is able to maximize the wealth of its stockholders. Choice A (Profit maximization) is a narrower goal that may not always align with creating long-term shareholder value. Choice C (Asset maximization) does not necessarily lead to the maximization of shareholder wealth, as some assets may not generate strong returns or cash flows. Choice D (None of the above) is incorrect as stockholder wealth maximization is a well-established concept in finance and business management.

________ Maximization Is Achieved When a Company Manages Its Business