Questions
1. What is finance? What is corporate financial management? What are the three major questions that financial managers address?
2. What are three problems associated with using profit maximization as the goal of the firm? What is shareholder wealth maximization? How does shareholder wealth maximization deal with these three problems?
3. Distinguish between investing decisions and financing decisions within the area of corporate financial management. Give one example of each.
4. Explain the four rights of common stockholders. Which of the four rights is often missing in modern corporations?
Problems
1. Consider the fictionalized account of Henry's car firm.
a. Describe some of the conflicts of interest between Henry and the bank.
b. Describe some of the conflicts of interest between Henry and the other shareholders.
c. Describe some of the conflicts of interest between the mangers and Henry.