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Chapter 1: Answer TWO of the following four (denoted by the letters a through d) questions. A good answer will include at least 5 sentences
Chapter 1: Answer TWO of the following four (denoted by the letters a through d) questions. A good answer will include at least 5 sentences answering the question and explaining 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 work force. Do you agree? Are there examples of companies where this conflict most likely to manifest itself? c) Customer satisfaction is the bedrock objective of many marketing gurus. How would you reconcile maximizing stock value with this objective? d) Corporate social responsibility is a hot concept, as companies as asked to be more socially conscious in the decision making. How should companies incorporate this into their decision making
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