Question

The primary operating goal of a publicly-owned firm interested in serving its stockholders should be to a. Maximize the firm's expected total income. b. Maximize the stock price per share over the long run, which is the stock's intrinsic value. c. Maximize the firm's expected EPS. d. Minimize the chances of losses. e. Maximize the stock price on a specific target date.

Answer 1

Answer:

the answer is: B) Maximize the stock price per share over the long run, which is the stock's intrinsic value.

Explanation:

The goal for every business is to maximize its profit and by doing so the value of the company increases. The price of stock is determined by future cash flows, so the managers of the corporation should try to maximize their future cash flows in order to maximize the price of the stock.

The stockholders are the bosses of the corporation's managers and their job is to maximize their wealth and this is achieved by maximizing the stock price over the long run.