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_what is goal of the firm: maximisation of shareholders wealth? Why _disadvantages: _ firm has to...

_what is goal of the firm: maximisation of shareholders wealth? Why
_disadvantages: _ firm has to be reponsible to other stakeholders
_disadvantages: _agency conflict
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Answer #1

Objective of the firm is to maximize the goal of the stakeholeders

Reason: As the stakeholders are the owners of the firm the, they would like to invest in the firm which maximizes their return in the form of dividends or invest in the new business from the return earned through the existing business.

And also firm has to consider other stake holders because other stakeholders means fixed rate of payment to them

the firm should be in the position to pay fixed obligation which is financial liability

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