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Question
The following situations typically require that the financial manager value an entire business in order to make important decisions:
I) If firm A is about make a takeover offer for firm B, then A's financial managers have to decide how much the combined business A + B is worth under A's management.
II) If firm C is considering the sale of one of its divisions or a business line, it has to decide what the division or the business line is worth in order to negotiate with potential buyers.
III) When a firm goes public, the investment bank must evaluate how much the firm is worth in order to set the price.
A. I only
B. I and II only
C. III only
D. I, II and III
Answer
This answer is hidden. It contains 12 characters.
Related questions
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Suppose VS's stock price is currently $20. In the next six months it will either fall to $10 or rise to $30. What is the current value of a put option with an exercise price of $15? The six-month risk-free interest rate is 5% (periodic rate).
A. $5.00
B. $2.14
C. $0.86
D. $7.86
Q:
Suppose Ralph's stock price is currently $50. In the next six months it will either fall to $30 or rise to $80. What is the option delta of a call option with an exercise price of $50?
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C. 0.600
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B. Lend PV of $50 and sell two calls
C. Borrow $50 and buy two calls
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If investors do not like dividends because of the additional taxes that they have to pay, how would you expect stock prices to behave on the ex-dividend date?
A. Fall by more than the amount of the dividend
B. Fall exactly by the amount of the dividend
C. Fall by less than the amount of the dividend
D. Cannot be predicted
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One key assumption of the Miller and Modigliani (MM) dividend irrelevance argument is that:
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B. There are no capital gains taxes
C. All investments are risk-free
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Generally, investors view the announcement of open-market repurchase of stocks as:
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B. good news and the stock price increases
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B. good news and the stock price increases
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D. very bad news and the stock price plunges