ECONOMICS

Detailed explanation-1: -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.

Detailed explanation-2: -Shareholder wealth maximization is the idea that the main goal of a business’s managers should be to increase its stock price as much as possible.

Detailed explanation-3: -The financial goal of a business is to maximise the shareholder’s wealth through sound financial decisions. This may be achieved by:-Investing in assets that add value (prudent)-Keeping cost of capital as low as possible.

Detailed explanation-4: -Wealth maximization’s ultimate goal is to keep the stockholders invested in a business by increasing overall value.

Detailed explanation-5: -Maximizing shareholder wealth is often a superior goal of the company, creating profit to increase the dividends paid out for each common stock. Shareholder wealth is expressed through the higher price of stock traded on the stock market.