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

Quizplus · Accepted Answer

Maximizing net income may not always lead to the highest stock price for shareholders. Other factors, such as long-term investments and strategic decisions, could also impact the stock price. Therefore, it is important for managers to consider the overall economic welfare of the firm's stockholders, rather than solely focusing on maximizing net income.

Which of the Following Statements Is Correct