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Maximisation of shareholder wealth

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Write a short essay of 500-600 words for each of the following questions. For each question, illustrate with an appropriate example in your answer.

a. 'The concept of risk aversion suggests that finance managers should only invest in risk-free assets'. Critically evaluate this statement (indicate whether you agree or disagree in your answer).

b. Explain why the concept of 'maximisation of shareholder wealth' is critical to a firm. Contrast this concept with the notion of 'maximisation of profit'.

Reference no: EM131455742

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