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Answer the following true/false question. Suppose that poorly run companies are more likely to be acquired due to the company trading at less than its
Answer the following true/false question. Suppose that poorly run companies are more likely to be acquired due to the company trading at less than its intrinsic value, and when these acquisitions occur, the stock price increases by 10% for the existing shareholders. If investors anticipate this effect and bid up the stock price of poorly run firms to its intrinsic value (before they are ever acquired) we would expect for more companies to be acquired and more companies with poorly run management teams to be replaced.
(a) True
(b) False
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