Business/Professional Ethics Directors/Executives/Acct
8th Edition
ISBN: 9781337485913
Author: BROOKS
Publisher: Cengage
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Some in the financial press were critical of seagram’s management for selling Du Pont stock for below current market price. Specifically, commentators said that Seagram;s management sold the Du pont stock at $4.50 per share less than market value, which damaged the wealth of seagram shareholders. Do you agree? Why or why not?
What are some of the risks an investor would face when investing in a stock? In addition to the business risk coming from the type of business environment that your company operates in, what additional risk would be of concern to an investor?
The company might be mismanaged and do poorly or go out of business.
The company's stock market return might be wildly unpredictable as the operating performance might be unstable.
The company's competitors might do a better job and take market share away?
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What risks would you face if you bought 100 shares of Tesla?
Discuss why General Motors’ stockholders probably didn’t suffer as a result of the reported loss. What do you think was the basis for our conclusion?
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- What is the value of Ls stock for volatilities between 0.20 and 0.95? What incentives might the manager of L have if she understands this relationship? What might debtholders do in response?arrow_forwardYou observed that high-level managers make superior returns on investments in their company’s stock. Would this be a violation of weak-form market efficiency? Would it be a violation of strong-form market efficiency?arrow_forwardWhy might a company repurchase its own stock? A) It believes that the market undervalues its shares B) To offset dilutive effects of employee stock options granted C) To recognize an economic gain when the treasury shares are later sold for a profit D) To improve earnings per share by reducing the denominator E) All of the above is it just A and B or is it all of the abovearrow_forward
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- If a company’s market price rises above the IPO price, does that suggest that the company left money on the table and thus received less for the shares than it should have received? If most companies do leave money on the table, does that indicate the IPO market is inefficient? explainarrow_forwardd. (1) What are the two primary ways companies raise common equity? (2) Why is there a cost associated with reinvested earnings? (3) Jana doesnt plan to issue new shares of common stock. Using the CAPM approach, what is Janas estimated cost of equity?arrow_forwardHow is it possible for an employee stock option to be valuable even if the firms stock price fails to meet shareholders expectations?arrow_forward
- Why do share values fall and stock market experiences a decline when something goes wrong in the political setting of a country?arrow_forwardWhich one of the following factors may affect stock return but out of the CEO's control?This chould potentially be a problem when trying up the compensation scheme to stock returns/ A.Supply chain risk management B.Federal monetary policy and regulations C.The rival firm recruits the company's employees D.Tte high inflation rate announced in the last quaterarrow_forwardwhy would investors prefer to invest in a company with a regular divided policy than a company with a low regular and extra dividend policy?arrow_forward
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