CFC Philippines Practice Questions - Chartered Financial Consultant (CFC) Exam - Institute Of Financial Consultants Philippines Exam

Why is maximizing shareholder wealth preferred over maximizing accounting profit (net income)?

Accounting profit does not reflect the time value of money or risk Shareholder wealth is easier to calculate on a quarterly basis Accounting profits are not audited in the Philippines Maximizing wealth automatically eliminates the agency problem

Correct Answer:

Accounting profit does not reflect the time value of money or risk

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