Answer :

1) a) A financial manager has several responsibilities some of which include:
• Making major investments and financial decisions such as deciding which assets the business should purchase and how best to fund them , also helping the business establish the optimal sales growth rate .
• He plans and forecasts the shape of the firms future position and coordinates the planning process with the other departments in the business .
• He deals with both the financial markets , i.e the capital and money markets.
• He coordinates and controls the businesses operations .
• He identifies and manages the firms risks .

b) one of the objectives of a business firm is to maximize on its profit. The managers look after their own personal goals , their workers welfare and the good of the community at large . Profit maximisation is basically the expansion of the firms net income .firms usually measure their profits in terms of earnings per share . However profit maximization is not the best objective a firm can have , its not a responsible goal because it ignores the following :
• Timing of returns . Its better for a firm to receive their funds early rather than later because the money can be reinvested to provide greater future earnings.
• Risk . This is the disregard of the chance that actual outcomes may be different than those expected .
• Cash flows. The profits a firm makes does not nesesarily result in cash flows available for the shareholders , they can receive cash flows in form of cash dividends paid to them and even the proceeds of selling their shares at a higher price then they intially paid for them .
• Dividend policy . stockholders like cash dividends but they prefer growth in EPS that result from investing earnings back into the business.

2) Shareholders of the company are the principals while the managers are the agents.
Managers should