Solution paper

Qno.01
1) What is the most appropriate goal of the firm?
A. Shareholder wealth maximization

. 2) "Shareholder wealth" in a firm is represented by:

. D. The market price per share of the firm's common stock.

3) The long-run objective of financial management is to:

B. Maximize the value of the firm's common stock.

4) A(n) ___________ would be an example of a principal, while a(n) ______________ would be

an example of an agent.
A. Shareholder; manager

5) The decision function of financial management can be broken down into the
_________________ decisions.
B. investment, financing, and asset management

Qno.02