Podcast
Questions and Answers
What does profit maximisation emphasise?
What does profit maximisation emphasise?
- Short-term accounting profit (correct)
- Minimising business cost
- Long-term shareholder wealth
- Increasing stock price
Which of the following is a key difference between profit maximisation and wealth maximisation?
Which of the following is a key difference between profit maximisation and wealth maximisation?
- Wealth maximisation ignores the timing of return, while profit maximisation cares about it.
- Profit maximisation considers the risk of return, while wealth maximisation ignores it.
- Wealth maximisation emphasises high returns regardless of risk, while profit maximisation cares about risk affecting business value.
- Profit maximisation invests in research for long-term development, while wealth maximisation minimises business costs. (correct)
What does wealth maximisation consider regarding risk compared to profit maximisation?
What does wealth maximisation consider regarding risk compared to profit maximisation?
- Wealth maximisation ignores the risk completely.
- Wealth maximisation considers the risk of return and its effect on business value. (correct)
- Profit maximisation ignores the risk completely.
- Profit maximisation only considers high-risk investments.
Which investment strategy is associated with wealth maximisation?
Which investment strategy is associated with wealth maximisation?
What aspect does profit maximisation ignore compared to wealth maximisation?
What aspect does profit maximisation ignore compared to wealth maximisation?
Why do shareholders buy a company's shares according to the text?
Why do shareholders buy a company's shares according to the text?
What is the key difference between Profit Maximisation and Wealth Maximisation?
What is the key difference between Profit Maximisation and Wealth Maximisation?
Which element is crucial for increasing wealth according to the text?
Which element is crucial for increasing wealth according to the text?
What does Profit not equate to, as mentioned in the text?
What does Profit not equate to, as mentioned in the text?
Why is considering the cost of capital important for Wealth Maximisation?
Why is considering the cost of capital important for Wealth Maximisation?
How does Wealth Maximisation view the timing of return compared to Profit Maximisation?
How does Wealth Maximisation view the timing of return compared to Profit Maximisation?
What is the significance of positive cash flow in increasing wealth?
What is the significance of positive cash flow in increasing wealth?
What principle emphasizes reinvesting cash flows to increase greater cash inflows?
What principle emphasizes reinvesting cash flows to increase greater cash inflows?
Why would a risk-averse investor demand for shares less, leading to a reduction in share price?
Why would a risk-averse investor demand for shares less, leading to a reduction in share price?
Which financial principle suggests that markets efficiently deal with information?
Which financial principle suggests that markets efficiently deal with information?
Why is the value of money today considered more than the value of money tomorrow according to the text?
Why is the value of money today considered more than the value of money tomorrow according to the text?
Which principle focuses on the importance of adding value through asset selection?
Which principle focuses on the importance of adding value through asset selection?
What does 'Cash is king' principle emphasize about the value of an asset?
What does 'Cash is king' principle emphasize about the value of an asset?
