Which of the following are frequently observed detrimental activities of managers on the "expectations treadmill"?
I.Increasing leverage.
II.Decreasing the weighted average cost of capital (WACC).
III.Pursuing risky major acquisitions.
IV.Pursuing unrealistic earnings growth.?
A)I and II only.
B)I,III,and IV only.
C)II and IV only.
D)II,III,and IV only.

Question

Quizplus · Accepted Answer

Managers on the "expectations treadmill" are often under pressure to meet or exceed unrealistic earnings growth targets, leading them to pursue risky major acquisitions and increase leverage. Decreasing the weighted average cost of capital (WACC) may actually be a positive strategy for the company, so it is not a frequently observed detrimental activity in this context. Therefore, option B - I, III, and IV only - is the best choice.

Which of the Following Are Frequently Observed Detrimental Activities of Managers