Final answer:
The main objective of Financial Management is to maximize shareholder value, by balancing short-term and long-term financial planning. While increasing profit is a goal, it's part of the broader objective to sustain value over time. Investing in the stock market and measuring return on investments are tools to achieve this wider goal.
Step-by-step explanation:
The objective of Financial Management is primarily concerned with the maximization of shareholder value through long-term and short-term financial planning and the implementation of various strategies. Increasing profit (increasing profit) is indeed a goal, but it is usually aimed at being sustainable over the long run rather than simply being a short-term objective. While investing in the stock market (investing in the stock market) and measuring return on investment are components of financial management, these are not the overall objectives but rather tools or methods to achieve the primary goal, which is to maximize value for shareholders.
When firms issue stock, they recognize that investors expect a rate of return, which can be achieved through dividends or capital gains. For example, a financial investor might buy a share of stock at one price and sell it later for a higher price, the profit from this transaction is known as a capital gain.