The primary aim of Financial Management is to maximise ________.
Answer & explanation
Correct answer: option 3
The correct answer is Option (3) → Shareholders’ Wealth
Option (1) Organisations’ Profit — Incorrect. Profit is important, but chasing profit alone ignores risk and the timing of returns. The aim is wider than profit.
Option (2) Initial Price of Shares — Incorrect. The issue price is fixed once, when the shares are first sold. Financial management aims at the market price of the shares over time.
Option (3) Shareholders’ Wealth — Correct. This is the wealth-maximisation concept. The company’s funds belong to the shareholders. Good investment, financing and dividend decisions raise the market price of the equity shares, and so increase the shareholders’ wealth.
Option (4) Employees’ Salary — Incorrect. Salaries are a cost of the business, not the aim of financial management.
NCERT (2026-27 Edition): “Objectives The primary aim of financial management is to maximise shareholders’ wealth, which is referred to as the wealth-maximisation concept. The market price of a company’s shares is linked to the three basic financial decisions which you will study a little later. This is because a company funds belong to the shareholders and the manner in which they are invested and the return earned by them determines their market value and price. It means maximisation of the market value of equity shares. …” |
Note: The same/similar question has been asked in different years by NTA as per the details given below:
| 2026 | 2025 | 2024 | 2023 | 2022 |
| 29-05 S1 24-05 S1 11-05 S2 | 30-05 S1 15-05 S1 | – | 29-05 S3 | – |