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 increases.
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 wealth, so any changes in capital structure should benefit the stockholders.

A Manager Should Attempt to Maximize the Value of the Firm