Final answer:
Shareholder wealth is the total value of shares owned by shareholders in a firm, measured by market capitalization. Wealth, more generally, is the accumulation of assets over time and includes all assets minus liabilities, which can show significant disparities in financial resources when compared to income.
Step-by-step explanation:
Shareholder wealth refers to the collective value of the shares held by individuals who own shares in a firm. The goal for a company, especially from the perspective of its shareholders, is to maximize the total value of its stock, thereby increasing the wealth of these shareholders. Shareholder wealth is typically measured by the market capitalization of a firm, which is calculated by multiplying the firm's current stock price by the total number of outstanding shares. In other words, if the stock price increases, the shareholder wealth also increases, presuming that the number of shares remains constant.
To provide a measure of wealth versus income inequality, one looks at the accumulation of assets over time versus the money that flows in regularly. Wealth encompasses the total value of all assets, including financial investments and property, minus any liabilities such as mortgages and credit card debts. Wealth measurement can often highlight greater disparities than income as it reflects accumulated assets over time, highlighting the potential for substantial financial resources among those with the ability to save and invest.