Which of the following goals of the firm is equivalent to the maximisation of shareholder wealth?
A)rofit maximisation
B)isk minimisation
C)stock maximisation
D)None of the above

Question

Quizplus · Accepted Answer

Stock maximisation is equivalent to the maximisation of shareholder wealth because the value of a company's stock is directly related to the company's performance, and therefore, the wealth of the shareholders. Profit maximisation and risk minimisation may not necessarily lead to maximisation of shareholder wealth as they focus on other objectives such as increasing revenue or reducing costs, and avoiding risk respectively.

Which of the Following Goals of the Firm Is Equivalent