Assume that you recently graduated and have just reported to
work as an investment advisor at the brokerage firm of Balik and
Kiefer Inc. One of the firm’s clients is Michelle DellaTorre, a
professional tennis player who has just come to the United States
from Chile. DellaTorre is a highly ranked tennis player who would
like to start a company to produce and market apparel that she
designs. She also expects to invest substantial amounts of money
through Balik and Kiefer. DellaTorre is very bright, and,
therefore, she would like to understand in general terms what will
happen to her money. Your boss has developed the following set of
questions that you must ask and answer to explain the U.S.
financial system to DellaTorre.
a. Why is financial management important to all managers?
b. Describe the organizational forms a company might have as it
evolves from a start-up to a major corporation. List the advantages
and disadvantages of each form.
c. How do corporations go public and continue to grow? What are
agency problems? What is corporate governance?
d. What should be the primary objective of managers?
(1) Do firms have any
responsibilities to society at large?
(2) Is stock price maximization
good or bad for society?
(3) Should firms behave
ethically?
