Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm’s stock price from a current level of P40 to P45 in 6 months and then to P50 in 5 years but another action keeps the stock at P40 for several years but then increases it to P70 in 5 years, which action would be better?
Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm’s stock price from a current level of P40 to P45 in 6 months and then to P50 in 5 years but another action keeps the stock at P40 for several years but then increases it to P70 in 5 years, which action would be better?
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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1. Should stockholder wealth maximization be thought of as a long-term or a short-term goal?
For example, if one action increases a firm’s stock price from a current level of P40 to P45
in 6 months and then to P50 in 5 years but another action keeps the stock at P40 for
several years but then increases it to P70 in 5 years, which action would be better?
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