Final answer:
The primary goal of a financial manager is to maximize the wealth of the shareholders by making strategic financial decisions that increase the company's value. Shareholders select company managers through a vote, and banks serve as financial intermediaries, channeling funds from savers to borrowers.
Step-by-step explanation:
The goal of a financial manager is to maximize the wealth of the shareholders. Financial managers strive to increase the company's value through various strategies and decisions that ultimately benefit the shareholders' investments. They are not focused on minimizing assets, increasing risks unnecessarily, or decreasing ownership of the firm, but rather on ensuring that the firm's financial operations support its overarching goal of enhancing shareholder value.
Shareholders choose company managers typically through voting mechanisms. The shareholders' votes are often based on the number of shares they own, and the selection is usually made during annual general meetings (AGMs) or special meetings called for this purpose. Managers are accountable to the shareholders for their decisions and the overall performance of the company.
Banks are called "financial intermediaries" because they act as a middleman between savers who deposit money and borrowers who take loans. This process facilitates the flow of funds within the economy, helping both sides to meet their financial needs.