30. Firm A has a stock market value of Tshs 200 billion (number of shares in issue x share price), while firm B is valued at Tshs 150 billion. The firms have similar profit histories (Tshs billion): Firm A Firm B 2014 15 18 2015 16 10 2016 17 23 2017 18 15 2018 18. The primary financial objective of a company is stated by corporate finance theory to be the maximization of the wealth of its shareholders, but this objective is usually replaced by the surrogate objective of maximization of the company's share price. Discuss the ways in which this substitution can be justified. 19. Give some examples of good financial management practices in a business firm. 20. Briefly explain the role of the following: The money markets by The bond markets c. The foreign exchange markets d) The share markets c) The derivatives market 21. How does money assist the society's well-being? 22. What difficulties might arise in state-owned industries in making financial decisions? 23. Which of the following are real assets, and which are financial? a) A share of stock b) A personal IOU A trademark d) A truck e) An underdeveloped land .) The balance in a firm's current account 8) An experienced and hardworking sales force A corporate bond 24. What benefits are derived from the financial services sector which have led to its growth over recent years in terms of employment and share of GDP? 25. What is managerialism and how might it be incompatible with shareholder interests? 26. Do you think there is some truths that an increasing share of household savings has been channelled through financial intermediaries? If so why and if not why not? 27. Discuss the relationship between economic growth and development of a financial services sector. 28. Assume that the chief executive of Twende Pamoja Inc receives a salary of Tshs 20 million plus 4 percent of sales. Will this encourage the adoption of decisions which are shareholder wealth enhancing? How might you change matters to persuade the chief executive to focus on shareholder wealth in all decision-making? 29. Explain why maximization of a company's share price is preferred as a financial objective to the maximization of its sales. 30. Firm A has a stock market value of Tshs 200 billion (number of shares in issue x share price), while firm B is valued at Tshs 150 billion. The firms have similar profit histories (Tshs billion): Firm A Firm B 2014 15 18 2015 16 10 2016 17 23 2017 18 15 2018 31. Consider the organization you are working for or where you have worked in the past and people you have come into contact with. List as many objectives, explicit or implicit, that have been revealed to, or suspected, by you. To what extent was goal congruence between different stakeholders achieved? How might the efforts of all individuals be channeled more effectively? 32. Review all the financial services your firm (or a firm that you are familiar with) purchases. Try to establish a rough estimate of the cost of using each financial intermediary and write a balanced report considering whether that firm should continue to pay for those services. Do the same for yourself as an individual or your household 33. Discuss the ways in which the concepts of agency theory can be used to explain the relationships that exist between the managers of a listed company and the providers of its equity finance. Your answer should include an explanation of the following terms: (a) asymmetry of information (b) agency costs (c) the free-rider problem (a) Provide reasons why, despite the same total profit over the last five years, shareholders regard firm A as being worth Tshs 500 more (extend your thoughts beyond the numbers in the table)
