Rob is a financial manager with Sharez, an investment advisory company. He must select specific investments-for example, stocks and bonds-from a variety of investment alternatives. Which of the following statements is most likely to be the objective function in this scenario?
A)Minimization of the number of stocks held
B)Maximization of expected return
C)Minimization of tax dues
D)Maximization of investment risk

Question

Quizplus · Accepted Answer

The objective function of a financial manager is typically to maximize the return on investment for their clients. Therefore, the most likely objective function in this scenario would be the maximization of expected return (option B). Minimizing the number of stocks held (option A) and minimizing tax dues (option C) may be included in the decision-making process, but they are not the main objective. Maximizing investment risk (option D) would not be a desirable objective for a financial manager as their primary objective is to minimize risk while maximizing returns.

Rob Is a Financial Manager with Sharez, an Investment Advisory