Question

Which of the following describe the reason(s) why maximization of intrinsic stock value benefits society?

Check all that apply.
A. Consumers benefit when companies rise prices beyond reasonable levels.
B. Workers prefer companies that minimize operating costs.
C. The owners of stock are society.
D. Successful companies attract more talent.

Answer 1

Answer:

B. Workers prefer companies that minimize operating costs.

C. The owners of stock are society.

D. Successful companies attract more talent.

Explanation:

The intrinsic stock value does not need to reflect the market value of the company stock. However, the intrinsic stock reflects the company's lucrative aspect, something more intuitive that describes the company's operating. Therefore, a high intrinsic stock value reflects a company with great reputation.

A company with high intrinsic stock will surely attract more talent, as the talent pool is motivated by working in a reputable, efficient company. This kind of company is surely cost-effective in terms of operation too.