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Financial management aims at choosing the best investment and financing alternatives by focusing on their costs and benefits. Its objective is to:

Solution

Correct Option: 1
  1. Increase the shareholders' wealth → Focus on maximizing returns.
  2. Decrease the shareholders' wealth → Not a goal of management.
  3. Increase the shareholders' capital → Related, but not primary aim.
  4. Decrease the shareholders' capital → Opposite of financial objectives.

Conclusion: Financial management's main goal is to increase the shareholders' wealth through optimal investment and financing choices.

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