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Assume a large investor knows with certainty the fundamental value of stock XYZ is $20. Also assume the current price of XYZ is $30 and

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Assume a large investor knows with certainty the fundamental value of stock XYZ is $20. Also assume the current price of XYZ is $30 and that individual investor demand for XYZ will increase for the next month to the extent the price will be $40 one month from now. The large investor can make the most money by Short selling XYZ today and waiting for the price to approach it's fundamental value of $20 O Waiting, and shortselling XYZ in one month when the price is $40, then waiting for the price to approach the fundamental value Buying stock XYZ today, and holding it for a month. Then selling stock XYZ in a month and going short XYZ, and maintaining this position until the price approaches its fundamental value There is no money making opportunity for the large investor For a currently publicly traded firm, If managers recognize that the current price of their stock is above its fundamental value (P > .), how could they take advantage of the situation for the benefit of the form? Borrow money at the current interest rate for AAA rated bonds O Issue stock in a Seasoned Equity Offering Repurchase Shares O None of the above

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