BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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risk related to uncertainty of returns
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timing of expected returns
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amount of returns expected
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all of the above
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Detailed explanation-1: -The objective of wealth maximization takes into account–risk associated withuncertainty of returns.
Detailed explanation-2: -Wealth maximization means to earn maximum wealth for the shareholders. So, the finance manager tries to give a maximum dividend to the shareholders. He also tries to increase the market value of the shares. The market value of the shares is directly related to the performance of the company.
Detailed explanation-3: -Solution: Shareholder wealth maximization is concerned with the maximization of a firm’s stock price. The shareholder wealth maximization goal states that management should seek to maximize the present value of the expected future returns to the owners (that is, shareholders) of the firm.
Detailed explanation-4: -Wealth maximization means maximizing the shareholder’s wealth due to an increase in share price, thereby increasing the company’s market capitalization. The share price increase directly affects how competitive the company is, its positioning, growth strategy, and profits.