An Overview of Financial Management and the Financial Environment: Shareholder W

Question

An Overview of Financial Management and the Financial Environment: Shareholder Wealth Maximization, Intrinsic Values, and Ethics The primary financial goal of a corporation is -Select- operations. To achieve their financial.goals, firms must develop products that consumers want, produce the products efficiently, sell them at Select prices, and observe laws relating corporate behavior. ., which involves maximizing the long-run value of the firm's stock and requires taking a long-run view of a fir Apart from their financial goals, companies also focus on a customers, and respecting their local community and environment. Select the statement that best completes the following statement: Most managers recognize t a. important but inconsistent with achieving their financial goals b. important and generally (but not always consistent) with achleving their financial goals c. irrelevant. past decade, there has been a strong push to improve business ethics Managers have an obligation to behave ethically, and they must follow th laws and other sodiety-imposed constraints. Most managers recognize that being ethical i s-Select with the corporation's primary goal A stock's intrinsic value is an estimate of a stock's 'true" value based on accurate risk and retum data. It can be estimated but equal to its intrinsic value, the stock The (-Select- not measured precisely. When a stock's actual market price is is in -SelactThe Select- investor's views determine a firm's actual stock price.

Explanation / Answer

1. The primary financial goal of a corporation is shareholder wealth maximization.

2. To achieve their financial goals, firms must develop products that consumers want, produce the products efficiently, sell them at Competitive prices and observe laws relating to corporate behavior

3. Most managers recognize that being socially responsible is important and generally (but not always consistent) with achieving their financial goals

4.  Most managers recognize that being ethical is Consistent with the corporation's primary goal

5. When a stock's actual market price is equal to its intrinsic value the stock is in Equilibrium

6. The Marginal investor's views determine a firm's actual stock price

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