Question : Questions: Business Finance and Its Meaning
Statement 1: Financial planning aims to maximize the wealth of shareholders and company value.
Statement 2: Financial planning disregards the interests of stakeholders.
Option 1: Statement 1 is true, and statement 2 is false.
Option 2: Statement 1 is false, and statement 2 is true.
Option 3: Both statements 1 and 2 are true.
Option 4: Both statements 1 and 2 are false.
Correct Answer:
Statement 1 is true, and statement 2 is false.
Solution : The correct answer is (a) Statement 1 is true, and statement 2 is false.
Statement 1 is true. Financial planning indeed aims to maximize the wealth of shareholders and increase the overall value of the company. The goal is to make financial decisions that enhance shareholder value by generating profits and returns on investment.
Statement 2 is false. Financial planning does not disregard the interests of stakeholders. In fact, it considers the interests of all stakeholders, including shareholders, employees, creditors, and the broader community. Effective financial planning involves aligning the interests of stakeholders with the company's financial goals and strategies.
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