A manager should attempt to maximize the value of the firm by:
A) changing the capital structure if and only if the value of the firm decreases.
B) changing the capital structure if and only if the value of the firm increases to the benefit of the stockholders.
C) changing the capital structure if and only if the value of the firm increases only to the benefits the debtholders.
D) changing the capital structure if and only if the value of the firm increases although it decreases the stockholders' value.
E) changing the capital structure if and only if the value of the firm increases and stockholder wealth is constant.

Question

Quizplus · Accepted Answer

The primary goal of a manager is to maximize shareholder value. Therefore, changing the capital structure to increase the firm's value, which benefits stockholders, aligns with this goal.

A Manager Should Attempt to Maximize the Value of the Firm