What is the primary financial objective of a business firm?
Correct answer: D. Maximising shareholder wealth
- A. Reducing the variety of products
- B. Maximising the number of employees
- C. Increasing the physical size of offices
- D. Maximising shareholder wealth
Explanation
Maximising shareholder wealth considers both expected returns and the timing and risk of those returns. Profit maximisation may ignore risk and the time value of money, so it is a narrower objective.
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Business finance covers capital requirements, sources of funds, budgeting, cash flow, investment decisions and basic financial statements and ratios. Banking includes commercial bank functions, deposits, loans, credit creation, interest and the role of a central bank, including its monetary policy and regulatory functions.
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