Discuss the concept of shareholder wealth maximization
This assessment addresses various terms used in finance and financial management. After completing this assessment, you will have demonstrated your understanding of the following;
Context
Financial managers are known as the agents of owners who are the stockholders in a company. The goal of financial managers is to maximize the shareholders’ wealth. Shareholders have many options to invest their money. Financial markets bring investors and borrowers together for transfer of funds from investors to firms. For the markets to be efficient, proper rules and regulations are necessary.
Suggested Resources
Weaver, S. C., & Weston, J. F. (2001). Finance and accounting for nonfinancial managers. New York, NY: McGraw-Hill.
Sherman, E. H. (2011). Finance and accounting for nonfinancial managers (3rd ed.). New York, NY: American Management Association
Assessment Instructions
Respond to the following five questions. Write your responses in a Word document, and number them 1–5.
Define the terms finance and financial management. What are the major sub-areas of finance?
Identify and define the three basic forms of business ownership. Describe the advantages and disadvantages of each.
Define the terms agency relationship and agency problem. Explain three different approaches to minimizing the agency problem.
discuss why ethical behavior is so important in the field of finance.
discuss the concept of shareholder wealth maximization. Is there a conflict between the goal of shareholder wealth maximization and the financial manager’s need to act in an ethical manner? Why or why not?
Use references to support your answers as needed. Be sure to cite all references using correct APA style. Your responses should be free of grammar and spelling errors, demonstrating strong written communication skills.
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