(CH1:1-2) Please help with the following Practice Exam. Thanks.

Instructions: Answer the following questions. Show your work since partial credit will be awarded in the event of an incorrect answer in a Word file, PDF, and/or excel file with solutions to the questions.

CH 1: Explain your logic behind the answer.

a) The objective in corporate finance is to maximize firm value. In practice, this often gets narrowed down to maximizing stock prices. Why is it necessary to narrow the objective down to this single number? What are some of the benefits and drawbacks of narrowing down the objective?

b) We are often told that maximizing stock prices is incompatible with having a happy and well-taken-care-of workforce. Do you agree? Are there examples of companies where this conflict is most likely to manifest itself?