Question

The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to

A. Maximize managers' own interests, which are by definition consistent with maximizing shareholders' wealth.
B. Maximize the firm's expected EPS, which must also maximize the firm's price per share.
C. Minimize the firm's risks because most stockholders dislike risk. In turn, this will maximize the firm's stock price.
D. Use a well-structured managerial compensation package to reduce conflicts that may exist between stockholders and managers.
E. Since it is impossible to measure a stock's intrinsic value, the text states that it is better for managers to attempt to maximize the current stock price than its intrinsic value.

Answer 1

D)

Step-by-step explanation:

Using a well-structured manergerial compensation package which include Salary, bonuses and benefits will reduce conflicts between stockholders and managers because stockholders primary aim is to increase stock value, rather than losing money with less valuable stock which shows that money and finance are very important to them