We can imagine the financial manager doing several things on behalf of the firms

Question

We can imagine the financial manager doing several things on behalf of the firms stockholders. For example, the manager might: a. Make shareholders as wealthy as possible by investing in real assets. b. Modify the firms investment plan to help shareholders achieve a particular time pattern of consumption. c. Choose high- or low-risk assets to match shareholders risk preferences. d. Help balance shareholders checkbooks. But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?

Explanation / Answer

a. Make shareholders as wealthy as possible by investing in real assets

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