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Unit 1 : Homework Problems 1 - 1 What is a firm's intrinsic value? Its current stock price? Is the stock's true long - run
Unit : Homework Problems
What is a firm's intrinsic value? Its current stock price? Is the stock's "true" longrun value more closely related to its intrinsic value or to its current price?
in equilibrium?
When is a stock said to be in equilibrium? Why might a stock at any point in time not be
Is it better for a firm's actual stock price in the market to be under, over, or equal to its intrinsic value? Would your answer be the same from the standpoints of stockholders in general and a CEO who is about to exercise a million dollars in options and then retire?
Explain.
What are the various forms of business organization? What are the advantages and disadvantages of each?
Should stockholder wealth maximization be thought of as a longterm or a shortterm goal? For example, if one action increases a firm's stock price from a current level of $
to $ in months and then to $ in years, but another action keeps the stock at $ for several years but then increases it to $ in years, which action would be better?
Think of some specific corporate actions that have these general tendencies.
How does a costefficient capital market help reduce the prices of goods and services?
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