Question

The primary financial goal of a corporation is shareholder wealth maximization, which involves maximizing the long-run value of the firm's stock and requires taking a long-run view of a firm's operations. To achieve their financial goals, firms must develop products that consumers want, produce the products efficiently, sell them at prices, and observe laws relating to corporate behavior.a. Apart from their financial goals, companies also focus on a wide number of non-financial goals including maximizing the welfare of their employees, efficiently and fairly serving their customers, and respecting their local community and environment.Select the statement that best completes the following statement: Most managers recognize that being socially responsible is important and generally (but not always consistent) with achieving their financial goals.b. As a result of financial scandals during the past decade, there has been a strong push to improve business ethics. Managers have an obligation to behave ethically, and they must follow the laws and other society-imposed constraints. Most managers recognize that being ethical is consistent with the corporation's primary goal.c. A stock's intrinsic value is an estimate of a stock's "true" value based on accurate risk and return data. It can be estimated but not measured precisely. When a stock's actual market price is equal to its intrinsic value, the stock is in equilibrium. The marginal investor's views determine a firm's actual stock price.

Answer 1

Shareholder Wealth Maximization, Intrinsic Values, and Ethics

Explanation:

The principle of shareholder wealth maximization (SWM) maintains that a highest possible return to shareholders is and therefore should be the objective of all multinational activity. From the point of view of financial management, the prices of the common shares of a company must be maximised.

People also compromise themselves for many other things, such as religion, their land, justice, knowledge, truth, art. or other items. All of these tasks convey the second feature of the value: they are valued for their own sake by someone.

Business ethics relates to the application of appropriate laws and policies on controversial issues.