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Should the goal of firm be maximisation of profit

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Question 1: The goal of the firm should be the maximisation of profit.

Question 2: The advantage of profit maximisation as a goal of the firm is that it recognises uncertainty and timing.

Question 3: The goal of the firm should be to maximise the wealth of the firm's shareholders.

Question 4: Profit maximisation is a goal used by economists to establish models that prove how firms incorporate risk in the decision-making process.

Question 5: To disregard the differences in risk characteristics of projects can result in incorrect decisions.

Question 6: Maximisation of the total value of a firm's ordinary shares is a valid objective of the firm because it encompasses the effects of all financial decisions.

Question 7: Shareholders react to poor investment or dividend decisions by causing the total value of the firm's shares to fall, and they react to good decisions by bidding the price of the shares up.

Question 8: An efficient market is characterised by a large number of profit-driven individuals who act independently of one another.

Question 9: Working capital management is primarily concerned with the acquisition of long-term assets.

Question 10: The capital budgeting decision involves the financial evaluation of investment proposals in fixed assets.

Reference no: EM132553408

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