Maximizing wealth - Study guides, Class notes & Summaries

What does it mean to be a rational actor? - Answer-You are able to rank order preferences based on expected utility. -Stable and transative Bounded Rationality (Herbert Simon) - Answer-People dont have the capability to be perfectly rational -repeatable and predictable rather than random -Differs from pure becuase people will try their best and fall short of pure Prospect theory - Answer--Models built on assumptions of rational behavior assumes that actors make decsions based on maximi...

Chapter 01 1. What is the primary goal of financial management? A. Increased earnings B. Maximizing cash flow C. Maximizing shareholder wealth D. Minimizing risk of the firm 2. Proper risk-return management means that: A. the firm should take as few risks as possible. B. consistent with the objectives of the firm, an appropriate trade-off between risk and return should be determined. C. the firm should earn the highest return possible. D. the firm should value future profits more high...

As finance emerged as a new field, much emphasis was placed on mergers and acquisitions. Answer: TRUE Difficulty: 1 Easy Topic: Introduction to corporate finance Learning Objective: 01-01 The field of finance integrates concepts from economics, accounting, and a number of other areas. Bloom's: Remember AACSB: Reflective Thinking Accessibility: Keyboard Navigation 2) Inflation is assumed to be a temporary problem that does not affect financial decisions. Answer: FALSE Difficulty: 1 Ea...

The financial manager must execute his or her duties independent of the other activities of the firm in order to properly maximize the value of the firm. T/F - F Deciding upon the form of organization for a business is an important financial decision with potentially significant consequences for the future wealth of the owners. T/F - T The proper goal of the financial manager should be to maximize the firm's expected profit (or net income), since this will add the most wealth to each of ...

MGF 402 Investment Management All Answers Correct Risk Aversion ️an individual who is rational will attempt to maximize their expected utility, rather than the expected value of their wealth Risk Seeking ️person enjoys taking risk and making more money rather than maximizing their utility Real assets ️determines the productive capacity and net income of the economy (land, workers, knowledge, buildings, tech) Financial Assets ️claims on real assets, don't directly contribut...

FINANCE 3110 Chapter 1 | Questions and Answers The primary role of the firm is shareholder wealth maximization The shareholder wealth maximization goal states that the management should seek to maximize the ______ of the expected future returns to the owners of the firm present value Financial managers can take a variety of actions to influence the market value of a company's stock. All of the following are classifications of actions taken EXCEPT _____ decisions. tax implications Shareholder...

WGU D076 Quiz Bank (New 2024/ 2025 Update) Finance Skills for Managers| Questions and Verified Answers| 100% Correct| A Grade QUESTION In what way are coincident indicators useful? They are analyzed during economic shifts to provide information about the current state of the economy. They are useful in conjunction with GDP and personal income to predict the future health of the economy. Incorrect. GDP and personal income are both types of coincident indicators, and neither of t...

ACC 333 EXAM 1 COMPLETE REVIEW STUDY GUIDE 2024 principle-agent relationship - ANS-when an owner or someone responsible for an asset (principal) delegates the control of said asset to another party who has a greater knowledge base principal-agent problem - ANS-a problem caused by an agent pursuing his own interests rather than the interests of the principal who hired him agency costs - ANS-the sum of incentive costs, monitoring costs, enforcement costs, and individual financial losses i...

Which of the following should be the primary goal pursued by the financial manager of a firm? Selected Answer: correct answer: c. Maximizing the market value of the firm's stock The treasurer of a company is a key subordinate of the _____. correct answer: a. financial vice president Which of the following statements is correct? correct answer: a. Under partnership law, if any partner is unable to meet his or her pro rata claim in the event the partnership goes bankrupt, the remaining ...

WGU D076 Complete Answers 100% Correct (Latest 2024) STUDY GUIDE 1. A variable that describes how the price of a security varies with the market.- Answer: Beta 2. An area of finance that deals with sources of funding, the capital structureof corporations, the actions that managers take to increase the value of the firm to its owners, and the tools and analysis used to allocate financialresources. Answer: Business Finance 3. Metrics and calculations used to determine whether a project ...