Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm’s stock price from a current level of P40 to P45 in 6 months and then to P50 in 5 years but another action keeps the stock at P40 for several years but then increases it to P70 in 5 years, which action would be better?

Should stockholder wealth maximization be thought of as a long-term or a short-term goal? For example, if one action increases a firm’s stock price from a current level of P40 to P45 in 6 months and then to P50 in 5 years but another action keeps the stock at P40 for several years but then increases it to P70 in 5 years, which action would be better?

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter7: Corporate Valuation And Stock Valuation

Section: Chapter Questions

Problem 11MC

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case study: should stockholders wealth maximization be thought of as long term or a short term goal? for example, if one action increases a firm's stock price from a current level of 40 to 45 in 6 months and then to 50 in 5 years but another action keeps the stock at 40 for several years but then increases it to 70 in 5 year, which action would be better?
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