"Shareholder wealth" in a firm is represented by:
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A. B. C. D.D
The correct answer to the question is D. The market price per share of the firm's common stock.
Explanation: "Shareholder wealth" refers to the value that a firm generates for its shareholders through its operations. It is important for a firm to create shareholder value to attract and retain investors, raise capital, and grow the business.
Option A, the number of people employed in the firm, is not a reliable indicator of shareholder wealth. While a company may have a large number of employees, it does not necessarily mean that the company is generating value for its shareholders.
Option B, the book value of the firm's assets less the book value of its liabilities, is a measure of the firm's net worth. However, it does not necessarily represent the value of the firm to its shareholders. The book value of a company's assets and liabilities is based on historical accounting values and may not reflect the true market value of the firm.
Option C, the amount of salary paid to its employees, is not directly related to shareholder wealth. While employee salaries are important to attract and retain talent, they do not necessarily translate into higher profits or stock prices for shareholders.
Option D, the market price per share of the firm's common stock, represents the current value that the market places on the company's future earnings potential. Shareholders benefit from an increase in the company's stock price, as it reflects an increase in the value of their investment. Therefore, the market price per share of a firm's common stock is the most accurate representation of shareholder wealth.