Question: Financial intermediaries and middleman are active participants in the U.S. Financial markets, explain the roles of intermediaries and middlemen? What are their differences?
22 Oct 2022,12:43 AM
1. The goal of Financial Management; What goal should always motivate the actions of the firm’s financial manager? Explain why?
2. Agency Problems Suppose you own stock in a company. The current price per share is $25. Another company has just announced that it wants to buy your company and will pay $35 per share to acquire all the outstanding stock. Your company’s management immediately begins fighting off this hostile bid. Is management acting in the shareholders’ best interests? Why or why not?
3. Agency Problems and Corporate Ownership Corporate ownership vary around the world. Historically, individuals have owned the majority of shares in public corporations in the United States. In Germany and Japan, however, banks, other large financial institutions, and other companies own most of the stock in public corporations.
a. Do you think agency problems are likely to be more or less severe in Germany and Japan than in the United States? Why?
b. What are the implications of this trend for agency problems and corporate control? (In recent years, large financial institutions such as mutual funds and pension funds have become the dominant owners of stock in the United States, and these institutions are becoming more active in corporate affairs.)
4. Financial intermediaries and middleman are active participants in the U.S. Financial markets, explain the roles of intermediaries and middlemen? What are their differences?
5. What is the primary market? What is the secondary market? How do they differ and work together?
6. The stock of ABC Corp., a new firm operating a chain of sports betting parlors, has just been sold in an initial public offering at a price of $15 per share. One week after this offering, the stock has risen in value to $25. You believe the stock will rise to $40 over the coming year.
i. You do not expect Tips to pay any dividends over the year.
ii. You require a rate of return on this stock of 18 percent.
iii. Do you believe this is a good investment at the current price of $25? Show your calculations, either in excel or financial calculator key strokes.
Expert answer
Financial intermediaries and middleman are active participants in the U.S. Financial markets, explain the roles of intermediaries and middlemen? What are their differences?
Financial intermediaries and middleman play an important role in the U.S. financial markets. They help to connect investors with companies that are looking for funding, and they also provide a variety of services that can make the process of investing easier and more efficient.
Intermediaries typically work with a large number of different investors, and they have access to a wide range of investment opportunities. This allows them to match investors with the companies that are most likely to meet their needs. In addition, intermediaries often provide advice and guidance to investors, which can help them make better decisions about where to invest their money.
Middlemen, on the other hand, typically work with only a few investors and have a more limited selection of investment opportunities. However, they can often offer lower fees and commissions than intermediaries.
Both intermediaries and middlemen play an important role in the U.S. financial markets, and they can offer different benefits to investors. It is important to understand the differences between these two types of players before making any decisions about where to invest your money.
The goal of Financial Management; What goal should always motivate the actions of the firm’s financial manager? Explain why?
The goal of financial management should always be to maximize shareholder wealth. Shareholder wealth is the total value of a company's shares, and maximizing it means increasing the company's stock price.
There are a few reasons why this goal is important. First, shareholders are the owners of the company, and so their wealth should be the primary concern of management. Second, share price is a good measure of a company's overall health and performance; if the stock price is rising, that means the company is doing well. Finally, share price is a key factor in attracting new investors, which is essential for a company's growth.
So, in short, the goal of financial management should be to maximize shareholder wealth by increasing the stock price. This can be done through a variety of means, such as investing in profitable projects, reducing expenses, and paying dividends. By following this goal, a company can ensure its long-term success.
The goal of financial management is to make decisions that will create value for the firm's shareholders. This goal should always motivate the actions of the firm's financial manager because it is the ultimate objective of the firm. Creating shareholder value is what will increase the firm's stock price and ultimately create wealth for its shareholders. Therefore, any decision that a financial manager makes should be focused on this goal. Sometimes difficult choices have to be made in order to achieve this goal, but if done correctly, they will ultimately create value for shareholders. The goal of financial management is to make decisions that will create value for the firm's shareholders. This goal should always motivate the actions of the firm's financial manager because it is the ultimate objective of the firm. Creating shareholder value is what will increase the firm's stock price and ultimately create wealth for its shareholders. Therefore, any decision that a financial manager makes should be focused on this goal. Sometimes difficult choices have to be made in order to achieve this goal, but if done correctly, they will ultimately create value for shareholders. The goal of financial management is to make decisions that will create value for the firm's shareholders. This goal should always motivate the actions of the firm's financial manager because it is the ultimate objective of the firm. Creating shareholder value is what will increase the firm's stock price and ultimately create wealth for its shareholders. Therefore, any decision that a financial manager makes should be focused on this goal. Sometimes difficult choices have to be made in order to achieve this goal, but if done correctly, they will ultimately create value for shareholders.
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