Choose one appropriate statement.

1. The movement of stock prices have certain patterns, and investors can make profits by studying such patterns.
2. If a hedge fund manager believes that Toyota will going to outperform Honda she will short stocks of both companies.
3. When one share of Apple stock is being traded at $150, the stock market believes that you can always sell a share of Apple stock for at least $150 in the future.
4. An undervalued stock should outperform the market in the long run.
5. Diversification is not appropriate because it would prevent investors from capitalizing on the superior return that can result from a concentrated holding of the stock of one successful company

Choose the statement that is not an appropriate reason for an acquisition to fail

1. Diversification benefits that is said to create value for their shareholders is illusory.
2. The acquiring and target companies have different costs of capital
3. Synergies are not realized
4. The acquiring company overpays for the target company
5. Cultural clashes lead to inefficiencies

Choose the most appropriate statement regarding financing options for firms.

1. Convertible bonds and convertible shares are hybrids of stocks and bonds.
2. Money raised through share issues need not be repaid.
3. Debt is a form of liability that has a variable rate of return.
4. Cost of funds raised through a bond issue is higher than the cost of funds raised through a share issue.
5. Companies must always pay dividends to reward shareholders.