Problem:
Can someone please provide some assistance with a question. We can imagine the financial manager doing several things on behalf of the firm's stockholders. For example the manager might:
1) Make shareholders as wealthy as possible by investing in real assets.
2) Modify the firm's investment plan to help shareholders achieve a particular time pattern of consumption.
3) Choose high- or low-risk assets to match shareholders' risk preferences.
4) Help balance shareholders' checkbooks.
But in well-functioning capital markets, shareholders will vote for only one of these goals. Which one? Why?