the primary goal of the firm is to maximize stockholder wealth. ---------------------------------profit maximization does not take into account the timing of earnings, while wealth maximization does. --------------------------------------wealth maximization takes risk into account profit maximization does not. ------------------------------------if profit maximization was the goal, a firm would never pay dividends. --------------------------------------------------------profit maximization does not take into account future activities such as sales growth, stability and diversification. ------------------------------------– since investors want to maximize their own wealth, they prefer the firm adopt strategies that will maximize stock price.
the primary goal of the firm is to maximize stockholder wealth. ---------------------------------profit maximization does not take into account the timing of earnings, while wealth maximization does. --------------------------------------wealth maximization takes risk into account profit maximization does not. ------------------------------------if profit maximization was the goal, a firm would never pay dividends. --------------------------------------------------------profit maximization does not take into account future activities such as sales growth, stability and diversification. ------------------------------------– since investors want to maximize their own wealth, they prefer the firm adopt strategies that will maximize stock price.
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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- ---------------------------------------------the primary goal of the firm is to maximize stockholder wealth.
- ---------------------------------profit maximization does not take into account the timing of earnings, while wealth maximization does.
- --------------------------------------wealth maximization takes risk into account profit maximization does not.
- ------------------------------------if profit maximization was the goal, a firm would never pay dividends.
- --------------------------------------------------------profit maximization does not take into account future activities such as sales growth, stability and diversification.
- ------------------------------------– since investors want to maximize their own wealth, they prefer the firm adopt strategies that will maximize stock price.
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