Question 11 (2 points) Which of the following statements is CORRECT. The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to maximize managers' own interests, which are by definition consistent with maximizing shareholders' wealth. The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to maximize the firm's expected EPS, which must also maximize the firm's price per share. The primary operating goal of a publicly-owned firm trying to best serve its stockholders should be to minimize the firm's risks by never accepting risky projects. In turn, this will maximize the firm's stock price. A publicly-owned firm should use a well-structured managerial compensation package to reduce conflicts that may exist between stockholders and managers. Which of the following statements is CORRECT? If a lower level person in a firm does something illegal, like "cooking the books" to understate costs and thereby artificially increase profits because he or she was ordered to do so by a superior, the lower level person cannot be prosecuted but the superior can be prosecuted. It is illegal for management to provide information they know is incorrect to regulatory agencies, such as the Securities and Exchange Commission, but it is not illegal to provide incorrect information to stockholders because they are the owners of the firm. If someone deliberately understates costs and thereby causes reported profits to increase, this can cause the stock price to rise above its intrinsic value. Both those who participated in the fraud and the firm itself can be prosecuted. Ethical behavior is not influenced by training and auditing procedures. People are either ethical or they are not, and this is what determines ethical behavior in business. Ethics should not be an important consideration in business and in business schools