Manager's choice for shareholders
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Can someone please provide some assistance with a question. Its for an MBA course..... We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example the manager might: a. Make shareholders as wealthy as possible by investing in real assets. b. Modify the firm's 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?
Thank you so much in advance for your help. I really appreciate it.
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Solution Summary
Which choice will manager's make for shareholders from the presented list are determined.
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Shareholders are going to vote for the wealth creating options. The reason they invest in a company is to make money and while considering risk and risk aversions, or trying to develop plans to meet needs over time is admirable, shareholders want ...
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