- Identify some potential agency problems that may arise between shareholders and managers.
- Why is the goal of maximizing owners’ wealth helpful in analyzing capital investment decisions? What are the other goals managers should also consider?
- The primary financial objective of companies is usually to maximize the wealth of the shareholders. Discuss whether this objective is realistic in the corporate world where ownership and control are separate and environmental and social factors are increasingly affecting business decisions.
- What are financial intermediaries and what economic service do they perform?
- a) Briefly outline the primary functions performed by the capital market and explain the importance of each function for corporate financial management.
b) Describe the Efficient Markets Hypothesis and explain the differences between the distinguished three forms of hypothesis.
Sample Solution