The shareholder wealth maximization model assumes as a universal truth that the market is efficient.

Question

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The shareholder wealth maximization model assumes that the market is efficient, meaning that all available information is already incorporated into stock prices, and thus maximizing shareholder wealth is achieved by making decisions that maximize the stock price. However, not everyone believes that the market is always efficient, and some argue that there are instances where the market can be driven by irrational behavior, resulting in market inefficiencies.

The Shareholder Wealth Maximization Model Assumes as a Universal Truth