Chapter 1 questions.docx

Chapter 1 questions.docx - Chapter 1 4 5 9 Chapter 2 5 6...

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 Chapter 1:  4, 5, 9  Chapter 2:  5, 6 Chapter 1 Question 4 It is better if the actual stock price and intrinsic value is equal. If the two are equal, then the stock is in equilibrium and there is no pressure to change the price of the stock. If you were looking at it from stockholders view or CEOs, then no, the result would not be same. Management’s goal is to maximize the stock price and intrinsic value. However, when maximizing the intrinsic value is good over the long-run, it wouldn’t work instantly and make still waiver at different points of time. A CEO that is looking to retire would want the price at market to be high when he retires because that would be the price he would receive at the time of retirement. Chapter 1 Question 5 The company would be dependent on the firms that do well for the compensation. The compensation would be a reward based on the stability of the company as a whole and how well sales and etc are doing. It would be easier to measure the growth rate by the intrinsic value
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  • Spring '09
  • AYRIS
  • Economics, stockholders view

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