Deck 1: An Overview of Managerial Finance

Question 1

The corporate charter is a document filed with the secretary of the state in which the firm is incorporated that provides information about the company, including its name, address, directors, and amount of capital stock.

Answer 1

True

Question 2

Two key limitations of the proprietorship form of business involve potential difficulty in raising the necessary capital and the presence of unlimited personal liability for business debts.

Answer 2

True

Question 3

The decision framework of the financial managers that seek that combination of assets, liabilities, and capital which will generate the largest expected projected income over the relevant time horizon is most useful for carrying out the firm's objective.

Answer 3

False

Question 4

If a firm raises its product prices beyond reasonable levels, it will simply lose its market share.

Question 5

Having the manager's compensation tied to the company's performance increases the agency problem that corporations face.

Question 6

The financial manager must execute his or her duties independent of the cash flow activities of the firm in order to properly maximize the value of the firm.

Question 7

The proper goal of the financial manager should be to maximize the firm's expected profit, because this will add the most wealth to each of the individual shareholders (owners) of the firm.

Question 8

In general, the role of the financial manager is to plan for the acquisition and use of funds so as to maximize the value of the firm.

Question 9

No firm can take cost-increasing, socially responsible actions in a competitive marketplace and expect to continue to compete, even if those cost-increasing actions yield significant benefits to the firm.

Question 10

A hostile takeover involves an attempt by one group of stockholders to solicit votes from other stockholders in order to put a new management team into place and is usually motivated by low stock price.

Question 11

Incentive compensation plans are used to attract and retain top managerial talent as well as to align the interests of management with shareholders.

Question 12

A proprietorship is an unincorporated business owned by one individual and the owner benefits from the limited liability for business, which limits his losses to what he has invested in the company.

Question 13

If a firm's managers want to maximize stock price, it is in their best interests to operate efficient, low-cost plants, develop new and safe products that consumers want, and maintain good relationships with customers, suppliers, creditors, and the communities in which they operate.

Question 14

The riskiness inherent in a firm's earnings per share (EPS) depends on both the types of projects the firm takes on and the manner in which the projects are financed.

Question 15

Managers of firms using accounting manipulations to inflate current earnings are likely to generate long-term benefits to the shareholders of the firm.

Question 16

The finance function is relatively independent of most other corporate functions. Marketing decisions, for example, might affect the firm's need for funds but are not affected by conditions in financial markets or other financing issues.

Question 17

In a competitive marketplace, if managers deviate too far from making decisions that are consistent with stockholder wealth maximization, they risk being disciplined by the market. Part of this discipline involves the threat of being taken over by groups who are more aligned with stockholder interests.

Question 18

The disadvantages associated with a proprietorship are similar to those under a partnership. One exception to this is the formal nature of the partnership agreement and the commitment of the partners' personal assets. As a result, partnerships do not have difficulty raising large amounts of capital.

Question 19

A financial manager's task is to make decisions concerning the acquisition and use of funds for the greatest benefit of the firm.

Question 20

In a competitive marketplace "good ethics" is a wonderful idea but an impractical standard. There are simply too few benefits to be gained from maintaining high business ethics.

Question 21

The investment function of finance _____.

A) takes decision regarding the cash flow of the investment corporation
B) determines the expenses incurred on ensuring the socially acceptable behavior of the investment corporation
C) determines the values, risks, and returns associated with such financial assets
D) is required to ensure that 50 percent of investments are in environment-friendly corporations
E) ensures that the corporations payout maximum dividends per share

Question 22

The controller of a company is a key subordinate of the _____.

A) treasurer
B) financial vice president
C) chief financial officer
D) credit manager
E) director of capital budgeting

Question 23

The success of financial institutions requires an understanding of _____.

A) regulations regarding the maximization of wealth applicable to the corporations
B) regulations that affect these financial institutions
C) the environment-friendly manufacturing methods adopted by various corporations
D) the socially responsible behavior required to be demonstrated by these institutions
E) their accountability in reporting the financial information for a publicly traded company

Question 24

Which of the following functions deals with the management of money?

A) Marketing
B) Investment
C) Financial services
D) Information systems
E) Managerial finance

Question 25

Which of the following is true of financial services provided by persons working in banks, insurance companies, and brokerage firms?

A) Persons working in banks, insurance companies, and brokerage firms help investors achieve the highest earnings per share.
B) Persons working in banks, insurance companies, and brokerage firms help individuals and companies determine how to invest money to achieve their financial goals.
C) Persons working in banks, insurance companies, and brokerage firms help corporations fulfil the regulations required by the Sarbanes-Oxley Act.
D) Persons working in banks, insurance companies, and brokerage firms help public corporations follow environment-friendly practices.
E) Persons working in banks, insurance companies, and brokerage firms help corporations make decisions concerning their cash flows, including both inflows and outflows.

Question 26

Exchange rate risk is the risk that the cash flows from a foreign project will be worth less than those same cash flows denominated in the parent company's home currency.

Question 27

Which of the following is true of financial institutions?

A) Financial institutions are the regulators of interest rates and other returns in financial markets.
B) Financial institutions require an understanding of factors that cause interest rates and other returns in the financial markets to rise and fall.
C) Financial institutions are accountable and responsible in reporting financial information for publicly traded corporations.
D) Financial institutions are required by the Sarbanes-Oxley Act to disclose the environment-friendly measures taken by investment corporations.
E) Financial institutions require public corporations to adopt socially responsible work practices.

Question 28

Industrial groups are organizations comprised of companies in different industries with common ownership interests, which include firms necessary to sell and manufacture products.

Question 29

The accounting and tax departments are the responsibility of the _____.

A) treasurer
B) inventory manager
C) director of capital budgeting
D) vice president of finance
E) controller

Question 30

Financial services refer to functions provided by organizations that _____.

A) deal with the most efficient management of the human resources
B) ensure that regulations of the Sarbanes-Oxley Act are followed by public corporations
C) recommend the most environment friendly method of operations to a corporation
D) deal with achieving maximum earning per share for the shareholders
E) deal with the management of money

Question 31

As financial institutions in other countries are generally less regulated than in the United States, _____.

A) foreign banks invest in less socially responsible companies only
B) foreign banks provide businesses with a greater variety of services than U.S. banks
C) foreign banks invest to maximize investment corporations' earnings
D) foreign banks provide investment opportunities in illegal business plans also
E) foreign banks are required to fulfill the regulations of the Sarbanes-Oxley Act

Question 32

The term multinational corporation is used to describe a firm that operates in two or more countries.

Question 33

Cultural differences do not impact the multinational corporations as they expand into different geographic regions.

Question 34

Identify a true statement about the financial services provided by organizations.

A) Financial services organizations invest only in environmentally responsible public corporations.
B) Financial services include services provided by banks and insurance companies only.
C) Financial services organizations make investment decisions based solely on the socially responsible behavior of corporates.
D) Financial services organizations provide comparative cash flow positions of competing corporations to investors to help them with investment decisions.
E) Financial services organizations help individuals and companies determine how to invest money to achieve their financial goals.

Question 35

The credit manager is supervised by the _____.

A) treasurer
B) inventory manager
C) director of capital budgeting
D) vice president of finance
E) controller

Question 36

Which of the following is true of the investment function of finance?

A) Investment function determines the most socially responsible behavior of the corporations
B) Investment function determines the values, risks, and returns associated with financial assets as stocks and bonds.
C) Investment function determines the optimal mix of securities based on the environment friendly behavior of the corporations.
D) Investment function determines the regulations applicable to a public corporation.
E) Investment function determines additional information about the procedures used to construct and report financial statements.

Question 37

Nations do not have the sovereignty to expropriate the assets of a firm without compensation.

Question 38

Assuming everything else equal, one of the concepts to consider to make sound financial decisions is that _____.

A) the riskier assets always have lower market value
B) the riskier assets are more valuable than (preferred to) less risky assets
C) the sooner cash is received, the more valuable it is
D) investors always prefer short-term, low value, and high-risk assets
E) investors always achieve higher returns from less risky assets

Question 39

The treasurer of a company is a key subordinate of the _____.

A) controller
B) financial vice president
C) chief executive officer
D) credit manager
E) director of capital budgeting

Question 40

The success of financial institutions depends on _____.

A) the understanding of the factors that cause interest rates and other returns in the financial markets to rise and fall
B) the environmentally responsible behavior of the shareholders of corporations
C) the expectations of long-term investors in the company
D) the awareness of the shareholders regarding the regulations that affect public corporations
E) the prior knowledge of the decisions that public corporations make concerning their cash flows

Question 41

Shareholders can ensure that firms pursue goals that are in their best interest by _____.

A) binding the management with stockholder-sponsored proposals
B) ensuring that management is working towards maximizing current earnings
C) compensating managers on the basis of the firm's best performance in the last five years
D) actively implementing remedies to realign management decisions with the interests of investors
E) providing incentives to managers to motivate them to take actions that maximize stock prices

Question 42

Identify a true statement about a limited liability partnership (LLP).

A) A general partner of a limited liability partnership is responsible for the negligence and irresponsibility of limited partners.
B) A limited partner of a limited liability partnership is responsible for the general management of the partnership business.
C) A general partner of a limited liability partnership is liable to pay tax on all the partnership income.
D) A general partner of a limited liability partnership is personally liable for all business debts.
E) A limited partner responsible for the negligence and irresponsibility of general partners.

Question 43

Compared to corporations, what is the primary disadvantage of partnerships as forms of business organizations?

A) The tax rates applied to partnerships are higher than the tax rates applied to corporations.
B) Any dividends paid to the owners of a partnership business are taxed twice, once at the partnership level and once at the personal, or individual level.
C) Partnerships generally are more complex to form (start up) than corporations.
D) Partnerships have unlimited lives whereas corporations do not.
E) The owners of a partnership, that is, the partners, have unlimited liability when it comes to business obligations whereas the owners of a corporation have limited liability.

Question 44

Which of the following statements is correct?

A) A hostile takeover is the primary method of transferring ownership interest in a corporation.
B) The corporation is a legal entity created by the state and is a direct extension of the legal status of its owners and managers, that is, the owners and managers are the corporation.
C) Unlimited liability and limited life are two key advantages of the corporate form over other forms of business organization.
D) In part due to limited liability and ease of ownership transfer, corporations have less trouble raising money in financial markets than other organizational forms.
E) Although stockholders of the corporation are insulated by limited legal liability, the legal status of the corporation does not protect the firm's managers in the same way.

Question 45

Which of the following forms of business offers limited personal liability but the company's income can be taxed like a partnership?

A) Limited liability partnership
B) Limited liability company
C) Corporation
D) Sole proprietorship
E) Partnership

Question 46

A limited partner in a limited liability partnership (LLP) _____.

A) is responsible for the general management of the business
B) is liable for only the amount invested in the partnership
C) is responsible for negligence, irresponsibility, or similar acts committed by any other partner
D) is liable to pay tax on the general partner's share of partnership income
E) is personally liable for the partnership debts

Question 47

Which of the following is a feature of an S Corporation?

A) An S Corporation is required to have more than 100 stockholders.
B) An S Corporation is required to have more than one type of stock outstanding.
C) The income of an S Corporation is taxed as capital gains to the owners.
D) The income of an S Corporation is taxed twice, at the corporate level and the owner level.
E) The income of an S Corporation is taxed the same as income earned by proprietorships and partnerships.

Question 48

Which of the following statements is correct?

A) A major disadvantage of a regular partnership or a corporation as a form of business is the fact that they do not offer their owners limited liability, whereas proprietorships do.
B) An advantage of the corporate form for many businesses is the fact that the corporate tax rate always exceeds the personal tax rate, which is the rate at which proprietorships and partnerships are taxed.
C) There are more partnerships and sole proprietorships than corporations in the U.S., but corporations produce more goods and services than do other forms of business.
D) Because corporations enjoy the benefits of limited liability, easy transferability of ownership interest, unlimited life, and favorable tax status relative to the situation for partnerships and proprietorships, most large businesses choose to incorporate.
E) Because lawyers have the incorporation process so automated (e.g., word processors for drawing up the necessary papers), it is less expensive to form a corporation than to form a proprietorship or partnership.

Question 49

Which of the following statements is correct?

A) In a partnership, liability for other partners' misdeeds includes but is limited to the amount a particular partner has invested in the business.
B) Partnerships must be formed according to specific rules, which include the filing of a formal written agreement with state authorities where the partnership does business.
C) A fast growth company would be more likely to set up a partnership for its business organization than would a slow-growth company.
D) Under partnership law, if any partner is unable to meet his or her pro rata claim in the event the partnership goes bankrupt, the remaining partners must make good on the unsatisfied claims.
E) A major disadvantage of a partnership as a form of business organization is the high cost and practical difficulty of its formation.

Question 50

Identify a true statement about an S corporation.

A) An S Corporation is required to have more than 100 stockholders.
B) An S Corporation is required to have more than one type of stock outstanding.
C) The income of an S Corporation passes through the company to the owners.
D) The income of an S Corporation is taxed twice, at the corporate level and the owner level.
E) The income of an S Corporation is taxed as capital gains to the owners.

Question 51

Identify a true statement about a limited liability company (LLC).

A) A limited liability company (LLC) has a maximum of 100 stockholders.
B) A limited liability company (LLC) offers the limited personal liability associated with a corporation.
C) A limited liability company (LLC) has only one type of stock (membership interest).
D) A limited liability company (LLC) is taxed as a partnership and the stockholders are subject to double taxation.
E) A limited liability company (LLC) is liable for the negligence, irresponsibility, or similar acts committed by any partner.

Question 52

Everything else equal, including firm size, dollar sales, type of product sold, and so forth, the primary difference between proprietorship and partnership business forms is that _____.

A) a partnership has more owners than a proprietorship
B) the combined personal liability associated with a partnership is significantly less than the combined personal liability associated with a proprietorship
C) a partnership is generally easier to form than a proprietorship
D) the annual growth rate of a proprietorship is limited by law, whereas the growth rate of a partnership is always potentially unlimited
E) many more businesses are formed as partnerships than proprietorships

Question 53

The primary goal of a publicly owned firm interested in serving its stockholders should be to _____.

A) minimize the debt used by a firm
B) maximize expected EPS
C) minimize the chances of losses
D) maximize the stock price per share
E) maximize expected net income

Question 54

If a limited liability company (LLC) is taxed like a partnership, _____.

A) income passes through to the owners
B) income is taxed twice
C) the owners have unlimited tax liability
D) the shareholders pay tax on dividends received by them
E) dividends are taxed on capital gain rate

Question 55

Which of the following statements is correct?

A) The corporate bylaws are the set of rules drawn up by the state to enable managers to run the firm in accordance with state laws.
B) Procedures for electing corporate directors are contained in bylaws.
C) Procedures that govern changes in the bylaws of the corporation are contained in the corporate charter.
D) Although most companies design a charter, only the bylaws are legally required to be filed with the secretary of state in order for a corporation to be in official existence.
E) The declaration of the activities that the firm will pursue and the number of directors are included in the corporate charter.

Question 56

In the United States, the most common form of business is the _____, and the form of business that generates most of the sales and profits is the _____.

A) corporation; corporation
B) corporation; proprietorship
C) proprietorship; partnership
D) proprietorship; corporation
E) corporation; partnership

Question 57

It is possible to limit the liability faced by some of the partners in a business by establishing a(n) _____.

A) limited liability partnership (LLP)
B) general partnership
C) sole proprietorship
D) S Corporation
E) limited liability company (LLC)

Question 58

Identify a true statement about a limited liability company (LLC).

A) A limited liability company can be taxed as a corporation only.
B) One of the owners of a limited liability company is designated as a general partner with unlimited personal financial liability.
C) A limited liability company has no more than 100 stockholders.
D) One of the owners of a limited liability company can participate in the management of the business.
E) A limited liability company can have more than one type of stock outstanding.

Question 59

Which of the following is true of a general partner of a limited liability partnership (LLP)?

A) A general partner of a limited liability partnership (LLP) is fully personally liable for all business debts.
B) A general partner of a limited liability partnership (LLP) is liable for the negligence, irresponsibility, or similar acts committed by any other partner.
C) A general partner of a limited liability partnership (LLP) is considered as an investor only.
D) A general partner of a limited liability partnership (LLP) is liable only to the extent of his/her investment in the partnership.
E) A general partner of a limited liability partnership (LLP) is taxed for the limited partners' share of the partnership's income.

Question 60

Which of the following statements about the corporate form of business organization is correct?

A) A corporation has the legal authority to act like a person when conducting business.
B) In the United States, corporations generate a lower percentage of total annual sales than either partnerships or proprietorships.
C) Corporations generally are smaller than either partnerships or proprietorships.
D) One of the most important features of the corporate form of business organization is that stockholders have unlimited liability.
E) Corporations can operate under different degrees of formality, ranging from informal, oral understandings to formal agreements filed with the secretary of the state in which the corporations does business.

Question 61

The management's primary goal is stockholder wealth maximization, which, translates into _____.

A) maximizing the value of the firm as measured by the price of its common stock
B) maximizing the earnings per share of the stockholders
C) maximizing the dividend received by stockholders
D) maximizing the net income earned by the company
E) maximizing the managerial compensation (incentives)

Question 62

Identify the internal factor that influences the stock prices of a firm.

A) Legal constraints
B) Capital structure
C) Tax laws
D) General level of economic activity
E) Conditions in the stock market

Question 63

Which of the following statements concerning a firm's quest to maximize wealth is correct?

A) In extremely competitive industries, we would expect firms would voluntarily engage in many socially beneficial projects to try to maximize their stocks' values.
B) Actions that maximize a firm's stock price are inconsistent with maximizing social welfare.
C) The concepts of social responsibility and ethical responsibility on the part of corporations are completely different and neither is relevant in maximizing stock price.
D) In a competitive market, if a group of firms does not spend resources making social welfare improvements, but another group does, in general, this will not affect the second group's ability to attract funds.
E) If the government did not mandate socially responsible corporate actions, such as those relating to product safety and fair hiring practices, most firms in competitive markets probably would not pursue such policies voluntarily.

Question 64

Which of the following statements is true of earnings per share?

A) A company is liable to pay tax on the earnings per share of stockholders.
B) Earnings per share can be maximized by changing from corporation to sole proprietorship form of organization.
C) A company can maximize its value by maximizing earnings per share.
D) Earnings per share is used in measuring the firm's potential for generating future cash flows.
E) A high earnings per share in the current period results in lower future risk position of the business.

Question 65

Which of the following statements is true of agency problems?

A) Regardless of economic conditions, if a firm's stock price falls during the year, this indicates that the firm's managers must not be acting in the best interests of the shareholders.
B) One method of controlling agency problems is to engage in the taking of "poison pills."
C) One of the best means to control agency problems is to require the managers and other important decision makers of the firm to also be owners of the firm.
D) Agency problems probably would not exist if the important decisions of a firm were made by persons who have no vested interests, such as ownership, in the firm.
E) Shareholders solve the agency problems by hostile takeover of the firm from the managers.

Question 66

Which of the following statements is correct?

A) Other things held constant, it is generally safer to invest money in a proprietorship than in a corporation.
B) There really is no difference between a general partnership and a corporation, because both have multiple owners and both offer limited liability to the owners.
C) If you are planning to start a business, which you will run as the sole employee, and if you expect the business to earn $1,000,000 per year before taxes, you always can minimize the total taxes you pay by setting up the business as a corporation.
D) According to the text, "agency problems" tend to increase when managers own larger relative amounts of the company's stock.
E) Maximizing the income statement item "net income" might not be the best goal for a corporation if the managers are interested in maximizing the economic welfare of the firm's stockholders (that is, the firm's stock price).

Question 67

Which of the following mathematical expressions computes earnings per share?

A) Earnings per share = Net Income × Number of outstanding shares of common stock
B) Earnings per share = (Net Income + Dividend Paid) ÷ Number of outstanding shares of common stock
C) Earnings per share = Net Income ÷ Number of outstanding shares of common stock
D) Earnings per share = (Net Income - Dividend Paid) ÷ Number of outstanding shares of common stock
E) Earnings per share = (Net Income - Dividend Paid) × Number of outstanding shares of common stock

Question 68

Paying Payroll Service (PPS) recently declared bankruptcy. The price of PPS's stock has dropped from approximately $10 per share one year ago to $1 today. You can imagine that stockholders are not happy that the value of their stock has dropped so significantly. At the same time, the financial position of the firm was deteriorating, PPS executives increased their salaries and perquisites substantially. Nothing they did violated any laws or was considered an unethical act. We would most likely describe this situation as _____.

A) an agency problem
B) an accounting glitch
C) an appropriate use of the tax laws
D) an appropriate action, because executive compensation should always be increased substantially each year
E) acceptable, because it is obvious that the executives were trying to maximize the value of the firm, which is what the shareholders want them to do

Question 69

Which of the following statements is correct?

A) The optimal dividend policy is the one that satisfies the shareholders because they supply the firm's capital.
B) The use of debt financing has no effect on earnings per share (EPS) or stock price.
C) The riskiness of projected EPS can impact the firm's value.
D) Stock price is dependent on the projected EPS and the use of debt but not on the timing of the earnings stream.
E) Dividend policy is one aspect of the firm's financial policy that is determined directly by the shareholders.

Question 70

All else equal, in which of the following forms of business would the possibility of an agency problem be the greatest?

A) A U.S. corporation in which individual stockholders own extremely small proportions of the company.
B) A proprietorship in which the owner is actively managing the business operations.
C) A partnership in which all the partners share management and decision-making responsibilities equally.
D) A foreign corporation with concentrated ownership that is, relatively few owners.
E) A U.S. corporation that gives company shares as incentives to its managers.

Question 71

Identify the external factor that affects the value of a firm's stock.

A) Capital structure decisions
B) General level of economic activity
C) Capital budgeting decisions
D) Dividend policy decisions
E) Cash flow of the firm

Question 72

Actions that help a firm increase the price of its stock also _____.

A) result in manufacturing of low-quality products
B) result in inflation
C) require the development of products that consumers want and need
D) require investment in high-cost manufacturing plants
E) result in sale of goods and services at highest possible prices

Question 73

Which of the following statements is correct?

A) Given the multi-owner nature of most large corporations, the agency costs associated with perquisite consumption are not really a problem.
B) Managers may operate in the stockholders' best interests, but they may also operate in their own personal best interests. As long as managers stay within the law, there simply are not any effective controls that stockholders can implement to control managerial decision making.
C) The potential for agency problems is greatest when individual stockholders own extremely small proportions of the companies and managers have little, if any, of their own wealth tied up in these companies.
D) An agency relationship exists when one or more persons hire another person to perform some service but withhold decision-making authority from that person.
E) Managers rule out any potential conflicts of interest with the shareholders by selling the firm's stock to outsiders.

Question 74

Which of the following actions is consistent with social responsibility but is not necessarily inconsistent with stockholder wealth maximization?

A) Selling a smokestack "scrubber" to follow the firm's air pollution policy to overlook conditions mandated by law.
B) Dumping effluent discharge into a river, where it ruins the drinking water of the community around the plant. The installation of machinery to treat the effluents is very expensive.
C) Investing in a smokestack filter to reduce sulphur-dioxide emissions in order to reduce the current tax being levied on the firm by the state for its pollution.
D) Making a large corporate donation to the local community in order to fund a recreation complex that will be used by the firm's employees only.
E) Consider buying out the competitor's business in an attempt to establish monopoly for its product in the market.

Question 75

Which of the following statements is true of a hostile takeover?

A) A hostile takeover results when a management wants the firm to be taken over.
B) A hostile takeover occurs when a firm's stock is undervalued relative to its potential.
C) A hostile takeover retains the managers of the acquired firm at their previous positions.
D) A hostile takeover refrains managers to take actions that maximize stock prices.
E) A hostile takeover results in poor management and inefficient operations.

Question 76

Which of the following actions should be taken by managers to avoid takeover threats?

A) Managers should take action to maximize stock prices.
B) Managers should declare lower dividends.
C) Managers should let the stockholders take the capital structure decisions.
D) Managers should take decisions that decrease the firm's expected future cash flows.
E) Managers should ensure that high-quality goods and services are sold at the highest possible prices.

Question 77

The primary goal of a financial manager should be to _____.

A) minimize operating costs
B) minimize interest payments
C) minimize tax payments
D) maximize operating income each year
E) maximize the value of the firm's stock

Question 78

Identify a true statement about business ethics.

A) Business ethics decrease shareholders' trust in the company.
B) Business ethics result in recurring fines and legal expenses.
C) Business ethics attract business from customers who appreciate and support political parties.
D) Business ethics reduce the economic viability of the communities where these firms operate.
E) Business ethics attract and keep employees of the highest caliber.

Question 79

Which of the following should be the primary goal pursued by the financial manager of a firm?

A) Maximizing net income (profits)
B) Maximizing the firm's net worth, or book value
C) Maximizing dividends paid to common stockholders
D) Minimizing variable operating expenses
E) Maximizing the market value of the firm's stock

Question 80

Stock price maximization requires _____.

A) sale of high-quality goods and services at the highest possible prices
B) efficient, low-cost plants that produce high-quality goods and services
C) the development of products that can be sold at a higher price to consumers
D) investment in high-cost plants to manufacture efficiently
E) investment in one business establishment to cut the operational cost of multiple establishments