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Business, 22.09.2020 21:01 deadscoper

We can imagine the financial manager doing several things on behalf of the firm’s stockholders. For example, the manager might: a. Make shareholders as wealthy as possible by investing in real assets.

b. Modify the firm’s investment plan to help shareholders achieve a particular time pattern of consumption.

c. Choose high- or low-risk assets to match shareholders’ risk preferences.

d. Help balance shareholders’ checkbooks.

But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?

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