W00MT.3
3. Why do we always talk about making shareholders better off? [6
pts]
A correct answer would give convincing indication that the student understands that the shareholders are the owners of the company and that their money is what is at risk in the company. Since they own the company and are taking the risk to fund its operations, the goal of the manager should be to increase their wealth, just as the goal of the manager of a mom and pop grocery store is to manage the store to make mom & pop better off.