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netineya [11]
3 years ago
15

According to finance theory, firms should attempt to maximize the_______-of the firm’s common stock. The benefit to this objec

tive is that it provides the best financial outcome for the firM_______
Business
1 answer:
Firlakuza [10]3 years ago
7 0

Answer:

According to finance theory, firms should attempt to maximize the <u>long term price </u>of the firm's common stock. The benefit to this objective is that it provides the best financial outcome for the firm's shareholders .

Explanation:

Finance theory distinguishes between profit maximization and wealth maximization.

Profit maximization is considered to be a narrow concept as it is only concerned of activities by which a company can maximize it's gains at any cost.

Wealth maximization takes into account taking care of the interests of stakeholders which include a company's shareholders. When emphasis is laid upon wealth maximization of shareholders, profits are automatically taken care of.

Shareholder's wealth maximization is one of the aims of financial management as it's a broader concept.

You might be interested in
The stock of Business Adventures sells for $50 a share. Its likely dividend payout and end-of-year price depend on the state of
Delvig [45]

Answer:

Holding period return = 14.49%, Standard Deviation = 11.08 approx

Explanation:

Eco Scenario    Dividend     Stock Price  HPR    Prob     Expected HPR

Boom                         3                 60         26        0.33        8.58

Normal                       1.2               58        18.4       0.33       6.072

Recession                  0.75            49        (0.5)      0.33      <u> (0.165)</u>

              Expected HPR                                                       14.49%

<u>Calculation Of Standard Deviation</u>

                                      (A)                     (B)           (A) - (B)  

P_{1}          P_{0}       D_{1}       Given return   Exp return       d          p           p.d^{2}

60        50      3            26                     14.49         11.51       0.33      43.718    

58        50      1.2          18.4                   14.49         3.91       0.33      5.045

49        50      0.75      (0.5)                    14.49        14.99     0.33      <u> 74.15</u>

                                                                                         Total p.d^{2} =  122.91

wherein, d = deviation

               p = probability

               Standard Deviation = \sqrt{Total\ p.d^{2} }  = \sqrt{122.91} = 11.08  

<u></u>

<u>Working Note</u>:

Holding period return = \frac{P_{1}\ -\ P_{0} \ +\ D_{1}  }{P_{0} }

Boom = \frac{60\ -\ 50 \ +\ 3  }{50 }   = 26%

Similarly, for normal = \frac{58\ -\ 50 \ +\ 1.2  }{50 }  = 18.4%

Recession = \frac{49\ -\ 50 \ +\ 0.75  }{50}  = (0.5)%

figure in bracket indicates negative return

7 0
3 years ago
2. A welder and a carpenter decided to get out of the construction industry and build farm trailers instead. From building a few
Firlakuza [10]

Answer:

Answer is explained in the explanation section below.

Explanation:

Data Given:

Material Cost Per Trailer = $500

Material Cost plus Profit Per Trailer (15%)  = $500 + 75 = $575

Selling Price = $1000

Labor Cost Remaining Per Trailer = $425

Formula to Calculate the number of Trailers:

X = X1 (N^{S})

Where,

N = number of Trailers

S = Slope Parameter

X = $425

X1 = $700

So, First we need to find the slope parameter, in order to calculate the number of trailers to be built.

S = \frac{log \alpha }{log 2}

where, α = 0.85 rate of improvement.

Plugging in the values into the formula, we get:

S = \frac{log (0.85) }{log 2}

S = -0.234

Now, we can easily find the number of trailers.

X = X1 (N^{S})

Plugging in the values,

425 = 700 x (N^{-0.234})

Solving For N, we get:

N = 8.4 Trailers

N = 9 Trailers.

Hence, 9 Trailers must be built in order to realize this rate of profit.

8 0
2 years ago
Tacoda Systems tracks consumers' online activity and delivers specific banners based on that activity. This tracking and ad deli
GaryK [48]

Answer:

Behavioral targeting

Explanation:

Behavioral targeting is an advertising technique that provides publishers and advertisers the opportunity to display relevant selling information and ads to users depending on the web-browsing behavior of the users.

Behavioral targeting mostly depends on data that are relevant to the behavior of user like items searched previously, last website visit date, pages viewed, amount of time used on a website, ads, content and buttons clicked, and among others.

Therefore, the tracking of online activity and delivery of ads based on that activity is called behavioral targeting.

8 0
3 years ago
Define the mergers and acquisitions of Tesla and define what has the company gained?
Phoenix [80]
Tesla has made 6 acquisitions and 2 investments. The company has spent over $ 2.82B for the acquisitions. Tesla has invested in multiple sectors such as Energy Storage Tech, Autonomous Vehicles and more.

It confirms that Hibar and Deepscale were relatively small acquisitions for Tesla.

Deepscale appears to be mostly what some people call “acqui-hire,” and the people who join Tesla probably got a bunch of shares.

As for Maxwell, which was a $207 million acquisition, and Hibar, which had to be less than $96 million, I think those two acquisitions combined is a somewhat inexpensive way to supercharge their now obvious move into manufacturing their own battery cells.

Again, we expect to hear more about Tesla’s effort to invest heavily into its own battery cell production in the next few months.

Tesla has acquired 6 companies, including 3 in the last 5 years. A total of 2 acquisitions came from private equity firms.

Tesla’s largest acquisition to date was in 2016, when it acquired SolarCity for $2.6B. Tesla has acquired in 3 different US states, and 2 countries. The Company’s most targeted sectors include machinery (34%) and automotive (17%).

Join Mergr and gain access to Tesla’s M&A summary, the M&A summaries of companies just like it, as well as recent M&A activity in the automotive sector.

M&A SUMMARY
M&A Total Activity6
M&A Buy Activity6
Total Sectors Invested 5
Total Countries Invested 2
M&A Buy/Sell Connections 2
M&A Advisors 1

5 0
3 years ago
Investors choose international diversification because:
Stells [14]

Answer: I found the correct and complete question:

Which of the following statements is most CORRECT with respect to international diversification?

a) the gains from diversification may be diminished due to combined correlations accompanied by volatility in world markets. b) world markets always seem to be most uncorrelated when volatility is present. c) world markets have displayed relatively low and fixed correlations over the last five years. d) global diversification produces gain even when world markets have correlations value near one.

Explanation: The correct answer is "a) the gains from diversification may be diminished due to combined correlations accompanied by volatility in world markets.".

Global markets are generally in different phases and many of them are part of weak economies that therefore have a high degree of volatility and some are correlated so that a loss in one of these markets can lead to a loss in another and earnings can be diminished.

4 0
3 years ago
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