BUSINESS ADMINISTRATION
FINANCIAL MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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To minimize the risk
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To maximize the return
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To maximize the owner’s wealth
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To raise profit
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Detailed explanation-1: -The goal of financial management is to maximize shareholder wealth. For public companies this is the stock price, and for private companies this is the market value of the owners’ equity.
Detailed explanation-2: -The primary objective of the financial management process is to optimize the financial and economic benefits of an investment.
Detailed explanation-3: -The primary goal of the financial management is to maximize the wealth of owners. All businesses aim to maximize their profits, minimize their expenses and maximize their market share.
Detailed explanation-4: -The Goal of Financial Management is to maximize the current value per share of existing stock. This is known as shareholder wealth maximization. This is not the same as maximizing profits because: Accounting profits can be easily manipulated.
Detailed explanation-5: -Explanation: the ultimate goal of the business entity is to earn profits and increase the wealth of the shareholders because this is the main objective of businesses.