FUNDAMENTALS OF CORPORATE FINANCE
FUNDAMENTALS OF CORPORATE FINANCE
10th Edition
ISBN: 9781260013962
Author: BREALEY
Publisher: RENT MCG
Question
Chapter 14, Problem 1QP

a.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

a.

Expert Solution
Check Mark

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Good investment decisions are more valuable to a firm than good financing decisions. Moreover, beating the market is not easy in an investment decision because of efficient markets.

Therefore, the given statement is classified as “False”.

b.

Summary Introduction

To discuss: Whether the given statement is classified under true of false.

b.

Expert Solution
Check Mark

Explanation of Solution

The reasons supporting the statement to be false are as follows:

Competition between investors creates efficient markets thus preventing any stock from being overvalued or undervalued. Therefore companies cannot sell their stocks for values more than what they are worth.

Therefore, the given statement is classified as “False”.

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