Wealth Maximization

What is Wealth Maximization?

Wealth maximization means maximization of the shareholder’s wealth as a result of increase in share price thereby increasing the market capitalization of the company. Share price increase is a direct function of how competitive the company is, its positioning, growth strategy and how it generates profits.

Explanation

Wealth-Maximization

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Source: Wealth Maximization (wallstreetmojo.com)

Example

Advantages

Some of the advantages are as follows:

Disadvantages

Some of the disadvantages are as follows:

Conclusion

Wealth maximization has both merits and demerits attached to it. It is a very important factor though for every investor before one invests in a company. They bring about happiness in the form of generating good return to its shareholders and shareholders also tend to invest more in such companies which may be required for its expansion or growth.

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This has been a guide to what is Wealth Maximization and its meaning. Here we discuss an example of wealth maximization along with advantages and disadvantages. You can learn more about from the following articles –

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