Reference no: EM132821997

Question - Kato Summers opened Take A Dive 17 years ago; the store is located in Malibu, California, and sells surfing-related equipment. Today, Take a Dive has 50 employees including Kato and his daughter Amber, who works part time in the store to help pay for her college education. Kato's business has boomed in recent years, and he is looking for new ways to take advantage of his increasing business opportunities. Although Kato's formal business training is limited, Amber will soon graduate with a degree in finance. Kato has offered her the opportunity to join the business as a full-fledged partner. Amber is interested, but she is also considering other career opportunities in finance. Right now, Amber is leaning toward staying with the family business, partly because she thinks it faces a number of interesting challenges and opportunities. Amber is particularly interested in further expanding the business and then incorporating it. Kato is intrigued by her ideas, but he is also concerned that her plans might change the way in which he does business. In particular, Kato has a strong commitment to social activism, and he has always tried to strike a balance between work and pleasure. He is worried that these goals will be compromised if the company incorporates and brings in outside shareholders. Amber and Kato plan to take a long weekend off to sit down and think about all of these issues. Amber, who is highly organized, has outlined a series of questions for them to address:

a. What kinds of career opportunities are open to finance majors?

b. What are the primary responsibilities of a corporate financial staff?

c. What are the most important financial management issues today?

d. (1) What are the alternative forms of business organization?

(2) What are their advantages and disadvantages?

e. What is the primary goal of the corporation?

(1) Do firms have any responsibilities to society at large?

(2) Is stock price maximization good or bad for society?

(3) Should firms behave ethically?

f. What is an agency relationship?

(1) What agency relationships exist within a corporation?

(2) What mechanisms exist to influence managers to act in shareholders' best interests?

(3) Should shareholders (through managers) take actions that are detrimental to bondholders?

g. Is maximizing stock price the same thing as maximizing profit?

h. What factors affect stock prices?

i. What factors affect the level and riskiness of cash flows?