Question 1

b. Explain with examples how the wealth maximization goals of firms differ from profit maximization goals. (3 marks)

c. Agency conflicts are most likely to occur in the corporate form of organization. What is about this form of organization that attracts these problems? What are the costs of agency problems to an organization and how can they be remedied? (4 marks)

d. What are financial markets? With the aid of a suitable diagram, illustrate how these markets interact with a business firm to create value for stakeholders. (3 marks)