With 350-400 words, answer the following questions.

With 350-400 words, answer the following questions.

For questions 1-1 should be a total of 350-400 words.

1-1a What does it mean to say that managers should maximize shareholders’ wealth “subject to ethical constraints”?

1-1b. What ethical considerations might enter into decisions that result in cash flow and stock price effects that are valued lower than they might otherwise have been?

For 1-2 questions should be a total of 350-400 words and support your rationale with at least one citation from the literature.

1-2a. What role do primary financial markets play in our economy?

1-2b. What role do secondary markets fill?

1-3c. Describe the relationship that exists between financial institutions and financial markets and suggest a method in which this relationship can run more smoothly







Solution Preview


Maximizing shareholder wealth means multiplying the number of outstanding shares by the market price share. The process involves careful evaluation of each decision and its impact on risk, timing, as well as income. Maximizing shareholder wealth is the company’s social responsibility, whereby the manner in which businesses are transacted should serve the interests of shareholders, stakeholders, employees, suppliers, buyers, the community, as well as any other significant group to the performance of the corporation (Roe, 2000).

(1,118 words)

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