MANAGEMENT

Detailed explanation-1: -Shareholder wealth maximization means that a company’s primary goal is raising its stock price. Shareholder wealth maximization can be a good thing because it gives a firm’s managers a clear objective that builds value.

Detailed explanation-2: -The primary objectives of financial management are – Profit Maximization and Wealth Maximization. Profit Maximization, as its name suggests, refers to the company’s profit should be increased, while Wealth Maximization aims to accelerate the entity’s value.

Detailed explanation-3: -Wealth maximization is superior to the profit maximization because the main aim of the business concern under this concept is to improve the value or wealth of the shareholders. Wealth maximization considers the comparison of the value to cost associated with the business concern.

Detailed explanation-4: -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. These returns can take the form of periodic dividend payments or proceeds from the sale of the common stock.